Tariff reduction on farm products is risky, should be debated under proposed India-US trade deal: GTRI

India Gazette

10-06-2025

New Delhi [India] June 10 (ANI): Global Trade Research Initiative (GTRI) is cautious about tariff reductions on farm products under the proposed India-US trade deal and emphasised that the potential impact of opening India's markets to subsidised American farm products needs careful consideration and thorough debate.
GTRI argued, once tariffs are cut in such agreements, it becomes nearly impossible to raise them again, even if prices crash, global trade is disrupted, or local farmers face sudden losses. It said this would expose India, especially as rich countries like the US and EU subsidise their agriculture heavily.
Niti Aayog's May 2025 working paper, 'Promoting India-US Agricultural Trade Under The New US Trade Regime,' recommends that India open its market to a wide range of U.S. farm products, including rice, pepper, soybean oil, shrimp, tea, coffee, dairy, poultry, apples, almonds, pistachios, corn, and genetically modified (GM) soy products, under the proposed India-U.S. Free Trade Agreement.
The government advisory body argues for eliminating tariffs on rice and pepper because India exports these items in large volumes. But GTRI contends that subsidised grain exports from developed nations like the US and EU have been a major driver of global grain price volatility, which can impact India's farmers and exports.
Niti Aayog's recommendations also address the supply gaps for reciprocal access, but GTRI says they ignore the structural risks to India's 700 million farmers.
Citing past experiences, such as binding zero tariffs for rice and wheat under GATT in the 1960s/70s, GTRI says it left India vulnerable and forced costly renegotiations. India should go for a flexible tariff regime.
'Keeping tariff flexibility is not outdated protectionism--it's a smart, essential policy tool to protect food security, support rural incomes, and respond to market shocks. Once this flexibility is given up in a trade agreement, getting it back is extremely difficult,' said Ajay Srivastava, founder of GTRI.
Niti Aayog also backs importing GM products like DDGS and soybean seeds under strict controls. However, GTRI argues that India's fragmented logistics and weak regulatory enforcement make such containment unfeasible. 'Once GM material enters the domestic chain, it risks contaminating local agriculture, creating trade disputes, and undermining public trust,' added Srivastava
The government planning body also recommends importing dairy and poultry products from the US, subject to the US meeting sanitary and phytosanitary (SPS) measures rather than tariffs.
On dairy products, the US has challenged India's SPS requirement that imported milk must come from animals not fed meat, blood, or internal organs. The US sees this as an unjustified trade barrier, but India considers it essential for public health and cultural values.
GTRI says replacing tariffs with weaker and challenge-prone SPS standards can erode both safety and ethical standards. It adds that NITI Aayog's recommendations are risky and require broader public consultation before being considered. (ANI)