A potential trade deal between India and the US has sparked a heated debate, with concerns raised over its impact on Indian farmers. The joint statement issued by the two nations has left many questions unanswered, particularly regarding non-tariff barriers and their potential consequences.
The Battle for Indian Agriculture: A Tale of Trade and Tariffs
In a recent development, India has pledged to address long-standing non-tariff barriers to trade in food and agricultural products from the US. This move has caused a stir among certain groups, who fear the potential implications for Indian farmers.
The joint statement, released on February 6, mentions India's commitment to tackle these barriers but fails to specify the exact nature of the changes. This lack of clarity has sparked controversy, especially considering the US's long-standing argument that India's refusal to import genetically modified (GM) products is a significant non-tariff barrier.
Biswajit Dhar, acting President of the Council for Social Development, raises an important point: "There is no clarity on whether that position has shifted." This uncertainty leaves room for speculation and concern.
However, Ashwani Mahajan, co-convenor of Swadeshi Jagran Manch, argues that addressing non-tariff barriers is not unusual, as such measures exist across countries. He highlights the disparity in the number of non-tariff barriers between the US and India, with the former having around 6,500, while India has approximately 350. Mahajan cautions that any relaxation in the agricultural sector must be approached with caution, especially regarding GM products.
"American farmers receive much higher subsidies, and Indian farmers may not be able to sustain competition. The government must protect Indian farmers, and we will have to see how this protection is ensured," Mahajan emphasizes.
To address these concerns, Commerce Minister Piyush Goyal has assured that no genetically modified food imports are being allowed. But here's where it gets controversial: Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), suggests that India's agreement to address non-tariff barriers could mirror US trade deals with countries like Malaysia, where American sanitary and health certifications take precedence over domestic standards.
Tackling Tariffs: A Balanced Approach?
The joint statement also mentions India's offer to reduce tariffs on certain food products, including dried distillers' grains (DDGs), tree nuts, fresh and processed fruits, soybean oil, wines, and spirits. Srivastava warns that concessions on specific food products could impact Indian farmers, especially with tariff cuts on apples, oranges, and soybean oil.
The statement further mentions tariff concessions on "additional products," leaving room for interpretation regarding the scope of these reductions.
Mahajan suggests that using tariff rate quotas for agricultural imports will allow authorities to assess domestic requirements and protect local producers. Economist Ashok Gulati views the overall framework as a balanced trade arrangement, with India's principal gains lying outside the agricultural sector.
"The biggest gain for India is the sharp reduction in US import duties on labor-intensive exports such as textiles, apparel, leather, gems, and jewelry," Gulati explains.
Regarding agriculture, Gulati believes the openings are limited. "What has been allowed is mainly access to the feed market through dried distillers' grains (DDGs) and some premium products like nuts, berries, wines, and spirits. This is unlikely to adversely impact farmers," he adds.
India has not granted concessions on sensitive food and agriculture items, including dairy, maize, soy meal, sugar, millets, citrus fruits, rice, wheat, and other staples. Experts unanimously agree that the impact of the limited concessions offered for American soybean oil and DDGs is expected to be minimal.
India is already a net importer of edible oils and purchases significant quantities of soybean oil from the US and other countries, Dhar points out.
Farmer groups have expressed concerns about the proposed concessions in agriculture and food, specifically DDGs, soybean oil, and certain fruits under the interim trade framework. They argue that increased access to US imports, even with protected staples, could hurt the agricultural sector and undercut domestic producers.
Mahajan explains that apple imports from the US will be allowed at a minimum import price of Rs 80 per kg, resulting in retail prices around Rs 200 per kg, which should avoid significant competition for domestic producers.
And this is the part most people miss: the potential impact on Indian farmers and the agricultural sector. With the interim trade deal framework in place, will Indian farmers be able to compete with subsidized American producers? The debate rages on, and we invite you to share your thoughts in the comments. Is this a fair trade-off, or does it put Indian agriculture at risk? Let's discuss!
