Indian farmers will greatly benefit from the interim bilateral trade agreement (BTA) between India and the US. This agreement could prove to be particularly beneficial given India’s strong export position and income enhancing potential in agriculture and allied sectors. India already enjoys a surplus of $1.3 billion in agricultural trade with the US.
India’s overall export position in agriculture sector strong
In the year 2024, India exported agricultural products worth $3.4 billion to America, while imports stood at $2.1 billion. These figures show that India’s overall export position in the agriculture sector is strong and there is scope for further expansion under the BTA.
- A major benefit of the agreement is zero-duty access to America’s approximately $46 billion agricultural import market.
- Already about $1.4 billion worth of products such as spices, tea, coffee, fruits, processed foods and essential oils come under the zero duty category.
- With no duty on these, Indian products will be more competitive in the American market and farmers will get better prices.
India will get preference in America’s market worth about 160 billion dollars
Additionally, with a reciprocal tariff of 18 percent, India will get preferential access to the US’s large import market of about $160 billion. This will boost the export of agricultural products in which India already has a strong position at the global level. The agreement is particularly important for marine products as the sector will gain access to the $25 billion US import market at lower tariffs, which is expected to boost livelihoods and export-based income in coastal areas.
This agreement is based on three key pillars
1.The first pillar is related to large export profits. Indian marine products already contribute $2.45 billion to the total marine imports of the US, while the total market is worth $24.89 billion, creating huge potential for expansion. Similarly, products like spices ($358 million), rice ($389 million), tea-coffee ($82.5 million) and fruits ($32.7 million) provide a stronger base than before.
2. The second pillar focuses on forestry-related products. Imports of products like vegetable sap into the US from India are worth $285.5 million, while the total US import market is worth $743.9 million. Zero duty on these will boost tribal and agro-forestry based income.
3. The third pillar focuses on future crops and livelihood-related products. Processed fruits, coconut oil and coconut products are already being imported into the US, but the total market is worth hundreds of millions of dollars. This will open up new opportunities for small farmers and women-led enterprises.
Overall, the data clearly shows that the India-US BTA has strong potential to provide growth in agricultural exports to India, better price realization, and broader livelihood support for farmers.
