Why Agriculture Became the Hardest Boundary in the India–U.S. Trade Deal

India can negotiate over tariffs, industrial goods, technology and even large future purchases. But when the discussion reaches agriculture, the room for agreement becomes much smaller.

The reason is not simply that farming is politically sensitive. Almost every country protects some of its agricultural interests. India’s problem is more basic: agriculture supports a very large number of livelihoods, and the products discussed in a trade deal are not just goods for sale. They are produced by millions of small farms that may not be able to handle sudden changes in prices.

This is why India can agree to some agricultural concessions without treating agriculture like any other market. The issue is not simply “free trade” versus “protection”. It is about which imports the Indian economy can absorb and which could bring a sudden change in global prices directly to a large number of small farmers.

Agriculture is different because the producer base is different

The easiest way to understand India’s position is to compare the structure of the two agricultural systems.

The United States had about 1.88 million farms in its 2024 survey. India’s 2015–16 Agriculture Census recorded 146.45 million operational holdings. This difference changes the political and economic meaning of market access.

An American agricultural product entering India reaches a market where production is spread across millions of farms. This matters because the price of an agricultural product is also a farmer’s income.

In manufacturing, a company facing cheaper imports can change its product, improve productivity, move production or leave the market. A small farm has fewer such choices. Land cannot easily be used for another purpose, and a family that depends on farming cannot quickly move to another job simply because an imported product has become cheaper.

This does not mean every farmer would lose from more agricultural imports, or that protecting agriculture is always the best economic choice. It means the cost of adjusting to change is spread very differently. This is the first reason agriculture becomes a boundary in trade negotiations.

Agricultural competition is not simply about tariffs

India is negotiating with agricultural systems that provide strong support to their producers. OECD figures for 2022–24 put the average annual Producer Support Estimate (PSE) at $38.2 billion for U.S. farmers, equal to 7.1% of gross farm receipts. The figure for the EU was $97.3 billion, or 16.4%. India’s PSE was negative at $73.1 billion, or -14.5% of gross farm receipts. This reflects how India’s agricultural policies affect prices received by farmers.

These figures need careful explanation. The PSE is not simply the amount of money governments give directly to farmers. It includes support from direct payments, help with inputs and policies that raise domestic prices above international prices.

The main point is that Indian farmers do not face exactly the same policy conditions as American farmers. A request to lower tariffs is therefore more complicated than a request to remove an ordinary import barrier. If an imported product is cheaper partly because the exporting country gives strong support to its farmers, the Indian government must consider both the benefits for consumers and the effects on local producers.

“Just lower the tariff” is therefore an incomplete way to describe the problem. The tariff is the visible policy tool. The deeper question is who bears the cost when domestic and international agricultural prices are different.

Why the red line concentrates around particular products

India is not equally cautious about every agricultural product. Its resistance is strongest around products whose imports could directly affect large domestic production systems and sensitive farm livelihoods.

As a result, agricultural market access—including lower tariffs and the removal of other import barriers—has remained a major obstacle in India–U.S. negotiations.

Dairy shows why. Milk in India is not produced only by a small number of large companies. Families consume milk themselves and sell what they do not need. Cooperatives such as Amul and Mother Dairy collect and process milk through networks at the village level. Estimates cited in the source material put the number of dairy farmers at nearly 80 million.

Opening the dairy market is therefore not simply a decision about allowing more cheese, milk powder or other dairy products into India. It could change the prices that millions of households receive. This is very different from lowering a tariff on a manufactured product. It helps explain why agriculture can become the point where a broad trade deal meets a strong domestic limit.

Selective accommodation: why some agricultural imports are different

If agriculture were simply a protected sector, the answer would be easy: India would keep agricultural imports closed. But that is not what has happened.

India has kept restrictions on U.S. genetically modified maize and soyabean while allowing some other feed ingredients, especially red sorghum and distiller’s dried grains with solubles (DDGS).

The difference is not simply whether a product comes from the United States. It is the role that product plays in India’s own agricultural economy.

As incomes rise and more people move to cities, diets are expected to include more protein-rich foods. This means greater demand for milk, eggs, meat and fish—and, in turn, more demand for animal feed.

The U.S. Department of Agriculture projected Indian maize consumption at 62.8 million tonnes in 2040 and 93 million tonnes in 2050 under a moderate-growth scenario, compared with 34.7 million tonnes in 2022–23. Under a faster-growth scenario, consumption could reach 98 million tonnes in 2040 and 200.2 million tonnes in 2050. Demand for soyabean meal is also expected to rise sharply.

Domestic production may not be able to meet this demand. India’s maize yield averaged 3.75 tonnes per hectare in 2024–25, compared with 11.25 tonnes in the United States. For soyabean, India’s yield was below one tonne per hectare, while the U.S. yield was 3.4 tonnes.

This creates a conflict within agriculture itself. India wants to protect farmers from imports that could cause serious competition. But the same economy increasingly needs affordable inputs for its livestock, poultry and fish farming industries.

Some imports can therefore support parts of Indian agriculture instead of simply competing with them. Feed ingredients can become an area where India allows more imports, even while food crops remain politically sensitive.

The feed market shows how selective the boundary can be

Consider maize. Broiler feed usually contains 55–65% maize by weight, while feed for layer birds contains around 50–60%. Of India’s expected 43 million tonnes of maize production in 2025–26, about 24 million tonnes was expected to be used for animal feed.

Maize is therefore more than a crop. It is also an input that affects the cost of India’s poultry and livestock industries.

The same logic explains why India has allowed some DDGS imports. DDGS is made after the starch in maize is used to produce alcohol. The remaining grain is dried and has a high protein content.

Indian ethanol distilleries were already supplying more than 3 million tonnes of DDGS to the feed industry. Production was expected to reach 4.2 million tonnes in 2025–26. Imports from the United States would add to this supply.

The difference is between imports that compete with what farmers produce and imports that lower the cost of an input used by livestock or poultry producers.

The same trade deal can therefore restrict imports in one part of agriculture while allowing more imports in another.

The GM question makes the boundary even sharper

The difference becomes especially clear with American corn and soyabean.

India has not opened its market to U.S. GM maize and soyabean or soyabean meal. At the same time, it has allowed some imports of sorghum and DDGS, including DDGS made from GM corn.

This may look inconsistent if the issue is seen only as “GM versus non-GM”. It makes more sense when we look at the different risks these products create.

India’s maize economy is also changing. One account in the source material notes that maize production has nearly doubled in recent years and that maize acreage increased by 10.5 lakh hectares in the referenced kharif season. The concern expressed there was that cheap maize imports could disrupt a growing domestic maize and ethanol industry.

The issue is therefore not only whether a product is safe or not. It is also about what happens to an existing domestic production system when much cheaper global supplies enter the market.

A cheaper imported input can help one producer, while a cheaper imported crop can hurt another. The government must therefore manage a problem in which different parts of agriculture have different interests.

Protection and reform are not necessarily opposites

India’s agricultural position is often presented as a choice between protecting farmers and opening the economy to trade. The actual policy problem is more complicated.

India has its own reasons to improve agricultural productivity, lower input costs and make farming more competitive. Greater access to cheaper feed ingredients can support these goals.

At the same time, sudden exposure of sensitive crops or dairy products to strong foreign competition could create serious costs for farmers who have few other options.

Agricultural protection cannot automatically be blamed on pressure from the United States. In the same way, every Indian agricultural reform cannot be treated as a concession made to Washington.

A more useful way to understand India’s agricultural red line is to look at its ability to decide where changes can happen, how quickly they happen, and which parts of agriculture bear the cost.

This leaves room for more trade where imports solve a shortage of inputs, for exports where Indian producers are competitive, and for continued protection where import competition could have serious effects on farmers or domestic production.

The trade deal reveals a boundary, not a wall

The Indian government’s description of the agreement shows this selective approach. It has stated that wheat, rice and maize were excluded, while agricultural products worth more than $1 billion would receive zero-tariff access to the U.S. market. It has also described DDGS imports as limited to around 1% of the country’s requirement.

These claims should not be seen as proof that every concern about agriculture has been resolved. Nor do they show that the agreement has no effects on different groups.

Instead, they show how the compromise is structured. India can open parts of agriculture where the adjustment is manageable or where imports support another domestic industry. It remains more cautious where market access directly affects large and sensitive groups of producers.

That is why agriculture became the hardest boundary in the negotiation.

The difficulty was never simply that India had more agricultural tariffs than it was willing to remove. It was that opening agriculture to more imports would affect a system where production, household income, food security, input costs and rural livelihoods are closely connected.

Once this is understood, India’s position begins to make sense. India can open some parts of agriculture without opening all of it. It can import an input without opening the market for the crop from which that input is made. It can seek access for its own farm exports while resisting imports that could harm sensitive producers. And it can reform agriculture while still controlling the speed and effects of change.

Trade agreements do not deal with economies as single markets. They deal with domestic systems that have different abilities to handle change.

For India, agriculture is where that ability is most uneven—and where the consequences of getting the boundary wrong go far beyond the price of an imported product.