Why India Keeps Its Farm Gates Narrow: The Politics and Economics of Agricultural Protection

India is often asked to open its markets.

The idea seems simple. Lower tariffs can bring cheaper imports, give consumers more choices, and make local producers compete. If India wants to become a bigger trading economy, agriculture should also become part of this process.

Yet agriculture is where India becomes most careful. This is not simply because farmers dislike competition or because India does not understand the possible gains from trade. Agriculture plays a different role in India’s economy from most other sectors.

India can lower tariffs on manufactured goods without making the same decision about agriculture. A tonne of imported steel and a tonne of imported farm produce affect the Indian economy in different ways. Imported steel mainly changes how firms compete. Imported farm produce can directly affect the income of millions of farmers who have limited ways to adjust.

A tariff on an industrial product affects a particular industry. A change in agricultural trade can affect millions of households whose income, food security and political interests are linked to the land.

This makes India’s farm gate much narrower than its industrial one.

Agriculture is not just another sector

The size of India’s farming population changes the political calculation.

The 2015-16 Agriculture Census recorded 146.45 million operational holdings in India. By comparison, the United States had about 1.88 million farms in its 2024 survey. India also had 97.14 million land-holding farmer families receiving the PM-Kisan income-support payment during April-July 2025, according to government data.

The difference is not just about numbers. In a country with a small farming population, opening agricultural markets can mainly be a question of prices, efficiency and consumer choice. In India, the same decision can affect the livelihoods of a very large number of households.

This concern is not unique to India. Farmers in other large economies also resist imports when they believe foreign competition could threaten their income. But India has a very large farming population and small average farm sizes. This makes the possible effects especially important.

The political system faces a basic problem. The benefits of opening agricultural markets may be shared by millions of consumers, while the costs may fall on specific groups of farmers. Consumers may pay less for a product, while the farmers who produce it receive lower prices. This makes agricultural protection difficult to remove.

There is another reason India is careful about opening agriculture: food security. India is not only trying to protect farmers’ income. It is also trying to maintain some control over the supply of essential food products.

India’s policy system includes tariffs, import restrictions, export controls, government buying of crops, input subsidies and other measures. Together, these create a buffer between Indian agriculture and global markets. A trading partner may see this buffer as too strong, but tariff rates alone do not explain the full system.

India’s simple average applied agricultural tariff has been estimated at 64.3%, compared with 4.2% for the United States, 8.7% for the European Union and 13.8% for China. Another tariff dataset puts India’s average agricultural tariff at 36.7%. The figures depend on the tariff measure and dataset used. The 64.3% figure should not be treated as a trade-weighted rate.

The more important question is what would happen if this protection disappeared quickly.

In a country where the average farm holding is around one hectare and about 46% of the labour force works in agriculture, the answer cannot be separated from the way people earn their living. The 46% figure comes from labour-force data. It does not mean that all these workers own farms.

This helps explain why agriculture often becomes a political red line in trade talks. It also explains why India has treated agricultural trade differently from trade in many manufactured products.

The protection system is more complicated than it looks

There is a common belief that Indian farmers are strongly protected while American farmers receive large subsidies. The reality is more complex.

The OECD’s Producer Support Estimate, or PSE, measures the support that consumers and taxpayers provide to agricultural producers. For 2022-24, India’s PSE was minus $73.1 billion, equal to -14.5% of gross farm receipts. The US had a positive PSE of $38.2 billion, or 7.1% of gross farm receipts.

Why was India’s figure negative?

India provides large subsidies for farm inputs. These averaged $47.9 billion in 2022-24. They covered things such as fertilisers, electricity, irrigation water, credit and farm machinery. Direct income support and other payments were much smaller, at about $7.9 billion.

At the same time, government policies can push the prices farmers receive below the prices they could theoretically get by selling their products for export. The OECD estimates that this negative price support was about $129 billion a year during 2022-24. This negative support was larger than India’s input subsidies and direct payments.

The result is an important contradiction. India can have high agricultural tariffs and large farm subsidies, while farmers as a whole still face policies that lower the prices they receive.

India’s tariffs cannot simply be described as money being transferred to farmers. They are part of a wider system in which the government tries to balance farmers’ interests, consumer prices, food security, public spending and foreign competition.

The American agricultural system works differently, but it also provides large amounts of support. The OECD puts average US producer support at $38.2 billion during 2022-24. This includes direct payments, input subsidies and support through commodity prices.

When Indian policymakers worry about opening sensitive farm markets to foreign agriculture that receives large amounts of support, they are not looking at tariffs alone. They are comparing two agricultural systems with very different forms of government support.

The trade-off is more complicated than protection versus liberalisation

Indian agriculture also depends on inputs whose supply and price affect other producers. The animal feed industry is a good example.

As incomes rise and people eat more milk, eggs, meat and fish, demand for animal feed also increases. Feed manufacturers need large amounts of ingredients such as maize and protein-rich oilseed meals. Domestic production does not always meet these needs.

The United States Department of Agriculture’s projections show how much demand could grow. Under its moderate-growth scenario, India’s maize consumption is expected to rise from an estimated 34.7 million tonnes in 2022-23 to 62.8 million tonnes in 2040 and 93 million tonnes in 2050.

Soybean-meal consumption is expected to rise from 6.2 million tonnes to 17.7 million tonnes and 28.3 million tonnes over the same periods.

These are projections based on a particular growth scenario, not guaranteed outcomes. But they show the pressure that rising demand could place on animal feed supplies.

For livestock and poultry producers, affordable feed is a major business concern. If domestic ingredients become scarce or expensive, imports can make it cheaper to produce chicken, eggs, milk and other animal products.

But greater access to imported ingredients can also put pressure on Indian farmers who grow similar crops.

The government must therefore consider the needs of two groups within the same agricultural system: farmers who want protection from imports, and livestock producers or other industries that need affordable inputs.

Protecting farm incomes, maintaining domestic production, managing food prices and keeping input costs low are all important goals. But they do not always lead to the same trade policy.

Why sensitive products differ from useful inputs

This tension is clear in India’s trade talks with the United States.

India has kept restrictions on genetically modified maize and soybean. At the same time, it has allowed limited access to other feed ingredients, including red sorghum and distillers dried grains with solubles (DDGS).

These products serve different purposes.

Sorghum gives the feed industry another source of carbohydrates without requiring the same opening for American GM maize.

DDGS is a protein-rich by-product of ethanol production. It can be used to add to animal feed supplies.

Indian grain-based ethanol distilleries were already supplying more than 3 million tonnes of DDGS to the feed industry. Domestic production was expected to reach 4.2 million tonnes in 2025-26.

The policy decision depends on the product. One import may compete directly with a crop grown by vulnerable farmers. Another may fill a supply gap or lower the cost of producing other agricultural goods.

The important question is what effect opening a particular market would have, and who would bear the costs.

That is why allowing selected feed ingredients to enter India does not necessarily mean that the government has decided to open sensitive agricultural markets more widely.

Similarly, restricting one category of imports does not mean that every agricultural import should be resisted.

India’s agricultural trade numbers show why the distinction matters

India remains a net exporter of agricultural products, although its trade surplus has become smaller.

Agricultural exports were about $53.1 billion in 2025-26, up from $52 billion in 2024-25. At the same time, the agricultural trade surplus fell from $27.7 billion in 2013-14 to $12.7 billion in 2025-26.

The types of products India imports help explain why an export surplus does not tell the full story.

Vegetable oils are India’s largest agricultural import category. Imports reached a record 169.4 lakh tonnes in 2025-26. Domestic production meets only about 40% of the country’s demand for vegetable oils.

Pulses offer another example. Domestic production meets about 80% of consumption demand.

These figures show where domestic supply does not fully meet domestic needs.

Agricultural imports can therefore reflect different economic conditions. They may compete with domestic producers, fill a shortage of a particular product, or provide an input used by another part of the agricultural economy.

The overall trade balance cannot show these differences on its own.

Why agricultural concessions remain politically sensitive

Agricultural trade concessions can affect groups whose incomes depend directly on the price of a crop, livestock activity or farm product. When producers have few other ways to earn a living, it can be difficult for them to adjust.

The government cannot judge market access only by looking at the total benefits.

Dairy makes this problem clear.

Dairy is closely linked to rural livelihoods, especially through small producers and cooperatives. Gujarat’s cooperative dairy system, for example, has millions of members.

When the possibility of opening the dairy sector appeared in a regional trade agreement in 2019, thousands of handwritten postcards from women in Gujarat were sent to the Prime Minister opposing the move.

For many of these participants, the question was whether their existing way of earning a living would remain possible.

A government can help a factory worker who loses a job through another employment programme. It is much harder to replace the economic role of farming when the sector supports a very large population and other job opportunities are limited.

A cheaper imported product may benefit consumers while lowering the income of domestic farmers.

Protecting those farmers may preserve their income, but it can also increase costs for industries that use farm products and for consumers.

The challenge is to decide where these trade-offs can be managed and where the burden on particular producers would become too great.

This helps explain why sensitive crops and dairy may be treated differently from agricultural inputs used by other domestic industries.

The difference is based on the kinds of risks that exist within agriculture itself.

The result is not complete protection

India does not keep every agricultural market closed forever.

Its system of protection is selective. Some products face high barriers, while others are opened more easily. Trade talks can create limited concessions without removing the wider system of protection.

Agricultural liberalisation is often discussed as if there are only two choices: open agriculture or protect agriculture.

In reality, India has often chosen a position between these two.

The government can lower a tariff on one product while keeping stronger protection for another. It can allow a limited amount of imports without allowing unlimited access. It can open the market for one agricultural input while keeping restrictions on another.

The political logic is straightforward.

The goal is not always to stop all foreign competition. It is to prevent competition from becoming so disruptive that it threatens sensitive groups or food-security goals.

This is also why agriculture is one of the hardest parts of trade negotiations.

Industrial goods can often be negotiated product by product. Agricultural concessions can affect livelihoods, prices and regional political interests at the same time.

But protection creates a difficult productivity paradox

A protective wall can reduce immediate pressure from foreign competition. It can also reduce the need to make changes quickly.

This does not prove that protection causes low productivity. But it creates a difficult situation: a sector can remain protected while still facing problems such as small farm sizes, limited technology and low yields.

India’s agricultural sector has large gaps in productivity and technology in several crops.

The Kashmir apple industry makes this problem especially clear.

Jammu and Kashmir’s apple sector supports around seven lakh families, directly or indirectly employs about 35 lakh people, and accounted for around half of the Union Territory’s horticultural production, according to the J&K Economic Survey 2025-26.

In 2024, apple production stood at about 21 lakh metric tonnes, with more than 1.47 lakh hectares under orchards.

Yet the size of farms is very different from that in major apple-producing countries.

One estimate cited in the discussion puts the average orchard size in J&K at only about 0.40 hectares, compared with farms of more than 50 hectares in New Zealand, the US and the EU.

Indian apple yields are estimated at around 7-8 tonnes per hectare. In countries such as the US, Iran, New Zealand and China, yields can reach 40-70 tonnes per hectare.

If foreign producers have larger farms, higher yields, more machines and better technology, Indian producers can face stronger competition when protection is reduced.

But this does not mean that tariffs caused the productivity gap.

Both things can be true at the same time: India can strongly protect agriculture while its farmers still face low productivity and technology problems.

Protection reduces farmers’ immediate exposure to foreign competition. But it does not automatically create larger farms, better technology, higher yields or stronger agricultural infrastructure.

When protection is reduced for a particular product, these underlying differences can become much more visible.

The long-term problem is different from the short-term political one.

In the short term, protection can make sudden changes less painful. In the long term, India still needs to improve the ability of its agricultural sector to produce more efficiently if farmers are expected to compete more openly.

A country cannot keep solving agricultural problems simply by keeping the gate closed forever.

But opening the gate before domestic productivity improves can expose the very farmers that protection was meant to shield.

The policy problem is therefore not just whether tariffs should be lowered. It is whether Indian agriculture can become strong enough to make lower protection possible, both politically and economically.

The farm gate is a political institution

India’s agricultural protection has lasted for a long time. This is not because of one interest group or one policy. It is the result of several forces working together:

millions of small producers → risk to livelihoods → political pressure → food-security concerns → protective trade policy → less exposure to foreign competition → continued need to improve productivity → renewed political caution about rapid liberalisation.

Each part supports the next.

Farmers want protection because competition can threaten their income. The government wants flexibility because food prices matter. Consumers want affordable food. Trade negotiators want better access to foreign markets while avoiding concessions that could cause problems at home.

Policymakers also know that foreign agriculture may operate with very different farm sizes, technology and levels of government support.

India’s agricultural trade problem is likely to become more important as people demand more protein-rich foods.

More demand for livestock products means more demand for animal feed. This makes the supply and price of maize, soybean meal and other ingredients more important.

Restricting imports may protect some farmers while making inputs more expensive for other producers.

The two goals of protecting farm livelihoods and improving agricultural productivity can support each other, but they do not always match.

That is why trade negotiations cannot be settled by choosing protection or liberalisation as a general rule.

They require a closer look at the product, the farmers who may be affected, the availability of other supplies and the costs that opening the market could create.

The deeper problem is not the gate. It is what lies behind it.

India’s farm gate is narrow because agriculture carries a burden that manufacturing does not carry in the same way.

It is at the same time a system of livelihoods, a food-security system and a political system.

That is why India can maintain high agricultural tariffs while also trying to become more connected to global markets.

But this system creates another problem.

Protection can buy time. It cannot, by itself, change the way agriculture produces goods.

The Kashmir apple example shows what happens when a protected sector faces producers with very different farm sizes, yields and levels of technology.

The issue is not simply that foreign imports are cheaper.

Opening a market, even in a limited way, can reveal problems in the domestic production system that were easier to ignore while the market was more protected.

The central problem in India’s agricultural policy is that protection may be needed to prevent sudden and painful changes, but it cannot replace the need to improve productivity.

At the same time, some imports may help other parts of agriculture become more competitive, even while imports of competing products threaten particular farmers.

India can remain careful about sensitive farm products while seeking access to selected inputs.

It can also remain a major agricultural exporter while importing products for which domestic supply is not enough.

These positions are not necessarily contradictory. Their effects depend on what is being imported and how it fits into domestic production.

The central question is therefore not simply whether India is willing to trade.

It is whether the benefits of opening a market are worth the costs of adjustment—and whether the producers who face those costs have realistic ways to adapt.

India keeps its farm gates narrow not because agriculture is outside the logic of markets, but because the effects of exposing agriculture to those markets are unusually wide.

The real test is not whether India can keep protecting its farmers.

It is whether India can use the protection it has to build an agricultural system that eventually needs less of it.