US President Donald Trump’s decision to impose a steep 50 per cent penal tariff on Indian agricultural products is more than a diplomatic jolt — it’s a reminder of how unequal the global farm trade is. Washington has justified the move as “reciprocity” for India’s refusal to open its markets to US grains, dairy, fruit, and fish. In truth, it is the familiar playbook of rich nations — demand access for their subsidised surpluses while shielding their farmers through lavish state support.
India’s stand was the right one, both economically and socially. Agriculture sustains 42 per cent of our population and employs 46 per cent of our workforce, yet it contributes less than 20 per cent of the GDP. This imbalance means that most Indian farmers remain trapped in debt and poverty. The recent NABARD (National Bank for Agriculture and Rural Development) Rural Financial Inclusion Survey reveals that an average farming household earns Rs 13,661 per month, with a mere Rs 4,476 from actual farming. The rest comes from supplementary work, such as working as labourers or engaging in petty trade. Opening the floodgates to the highly mechanised, subsidy-backed output of US farms would devastate these fragile livelihoods.
The US spends over $48 billion annually on domestic farm support, according to WTO data. This includes crop insurance subsidies covering up to 60 per cent of premiums, whereas a large number of our farmers are waiting for compensation for their produce losses under PMFBY (Pradhan Mantri Fasal Bima Yojna). In the US, price guarantees and marketing loans ensure farmers earn above-market rates. Our farmers are waiting for a legal guarantee of MSP. Export-linked supports disguised as food aid and development programmes allow US wheat, corn or dairy farmers to sell abroad at or below cost without losing income. India’s WTO-notified support — the aggregate Measurement of Support (AMS) — is less than 5 per cent of production value, far below the 10 per cent limit allowed for developing countries. This is not competition — it’s an uneven playing field.
Only 2 per cent of the US population works in agriculture; in Germany and the UK it’s just 1 per cent, in Japan 3 per cent. With 46 per cent of its population working on farms, India is in the company of Afghanistan (45 per cent) and North Korea (47 per cent). Even China, which in 1991 had 63 per cent of its workforce in agriculture, has cut the number to 22 per cent — below the global average of 26 per cent.
Structural weaknesses make matters worse. Average farm size has shrunk from 2.28 hectares in 1971 to 0.74 hectares in 2021 — too small for efficient mechanisation. Input costs — diesel, fertilisers, seeds — have risen faster than crop prices, squeezing margins. That a large percentage of India’s population is engaged in agriculture is a symptom not of farming’s attractiveness, but of manufacturing and services failing to create the 7.9 million jobs a year.
Imports were a necessary measure to protect our farmers in the short term. However, in the long run, genuine farmer welfare demands more than simply keeping competition at bay. It requires equipping farmers with the essential tools, providing market access, and creating alternative employment opportunities. To achieve this, we must implement three urgent and decisive shifts.
First, India must accelerate labour transition by transitioning millions from low-yield farming into manufacturing and services, following the model established by China. This calls for a focused industrial policy that targets labour-intensive sectors like textiles, food processing, and light engineering, coupled with robust rural skill training and urban job creation.
Second, we must prioritise farm consolidation and mechanisation. By promoting cooperative farming, reforming land leasing, and supporting Farmer-Producer Organisations (FPOs), we can effectively reverse land fragmentation. Pooling holdings allows for the viability of modern irrigation, storage, and precision agriculture, which will significantly increase yields and lower per-unit costs.
Third, we need to boost value addition and enhance export competitiveness. India’s farm exports, which stand at $48.15 billion for 2023–24, could experience substantial growth through improved logistics, branding, and quality certification. Reducing post-harvest losses from the current 15–25 per cent to the global standard of 5 per cent can release vast quantities for export.
India must take a strong stand against the hypocrisy of wealthy nations in multilateral forums. The US and EU’s so-called “Green Box” subsidies, which they claim are non-trade-distorting, effectively grant their farmers an unfair advantage in global markets. New Delhi should demand a recalibration of subsidies under the WTO’s Agreement on Agriculture, ensuring that the food security and procurement programmes of developing countries are protected while the support for affluent nations is scrutinised.
While Trump’s tariffs may be temporary, the structural weaknesses in Indian agriculture are permanent unless we act decisively. Protection must be seen as a strategic bridge to competitiveness, not a blanket substitute for it. India has the opportunity to seize this moment and drive structural change — shifting excess labour into higher-value sectors, consolidating and modernising farms, and enhancing our competitive agri-exports. The next time a foreign leader imposes a tariff, we will not react with fear but with confidence. Until then, we must maintain a protective shield, but let its purpose be to buy time for transformation.
Protection serves a purpose, but it is reform that will ultimately secure our agricultural future, and for this, the Rashtriya Kisan Kalyan Kosh, a separate budget like defence, is the need of the hour.
The writer is former CM, Haryana. He headed the Congress Committee on Agriculture and Farm Welfare
