When free trade meets unequal fields: The India–US agriculture question

By Vikas Meshram 

The proposed trade agreement between India and the United States has triggered intense debate across the country. This agreement is not merely an attempt to expand bilateral trade; it is directly linked to Indian agriculture, the rural economy, democratic processes, and global geopolitics. Free trade agreements (FTAs) may appear attractive on the surface, but the political economy and social consequences behind them are often unequal and controversial. Once again, a fundamental question has surfaced: who will benefit from this agreement, and who will pay its price?

Following the release of the draft agreement, several farmers’ organizations have expressed serious concerns and are preparing for a nationwide protest starting February 12. Farmers’ apprehensions are not limited to tariff concessions on soybean oil, grains, or apples. These concerns relate to trust, transparency, and the future of Indian agriculture. While the government has repeatedly assured that agriculture and the dairy sector will be protected, the agreement includes provisions to reduce tariffs on various agricultural and food products and to remove non-tariff barriers, which has heightened farmers’ anxiety.

Previous free trade negotiations with the European Union and New Zealand raised similar concerns, as cheaper imports were feared to adversely affect local producers. Historically, FTAs have been important instruments for expanding global trade. Since the establishment of the World Trade Organization (WTO), reducing tariffs, opening markets, and creating a multilateral trade system have become global policy objectives. However, the experience of many countries in the Global South suggests that FTAs often benefit multinational corporations, exporters, and advanced economies, while small farmers, local industries, and informal workers bear the costs. Studies by the FAO and UNCTAD indicate that after agricultural market liberalisation, many developing countries witnessed rising rural income inequality and stagnant or declining incomes for small farmers.

The apple industry provides a particularly striking example. In Himachal Pradesh, Jammu and Kashmir, and Uttarakhand, apples are not just a crop but the backbone of the mountain economy. If import tariffs on American apples are reduced and minimum import prices are altered, American apples could enter the Indian market at prices comparable to premium domestic apples. Consumers may then prefer imported apples of similar price but higher perceived quality, reducing the market share of local producers. Cold storage operations could become unviable, pushing the local apple industry into a severe crisis.

A similar situation exists for soybean and grains. In India, soybean cultivation is largely undertaken by small and marginal farmers. On average, one acre of land in India produces about one metric tonne of soybean, whereas in the United States, genetically modified soybean varieties can yield up to three metric tonnes per acre. This productivity gap creates unequal competition. Moreover, American farmers receive substantial government subsidies. On average, U.S. farmers receive around $66,000 annually in subsidies, and a special assistance package of $12 billion has been proposed for 2026. In contrast, Indian farmers receive limited support and often sell their produce at prices 30–40 percent below the Minimum Support Price (MSP). Under such conditions, free trade resembles competition on an uneven playing field.

The agreement is not only economic but also political. Midterm elections are approaching in the United States, and agriculture is a powerful political sector there. The trade war with China significantly affected American farmers by shrinking export markets. As a result, the U.S. administration is seeking new markets. With a population of 1.4 billion, India represents an enormous opportunity. A trade agreement with India thus forms an important component of U.S. political and economic strategy, aimed at reducing rural discontent and appeasing the farm lobby.

One of the most serious concerns surrounding the agreement is the lack of transparency. Farmers’ organizations, opposition parties, and several state governments have demanded that the full details of the agreement be placed before Parliament. Trade agreements have consequences as significant as domestic legislation, as they affect the livelihoods of millions. Parliamentary debate, public consultation, and impact assessments are therefore essential. Implementing major policy decisions without democratic processes undermines public trust and heightens social unrest.

Indian agriculture is already grappling with multiple crises—indebtedness, climate change, rising input costs, market volatility, and policy uncertainty. According to the Organisation for Economic Co-operation and Development (OECD), Indian farmers suffered losses amounting to ₹111 lakh crore between 2000 and 2025. If cheap imports flood domestic markets, prices could collapse further. Past reductions in tariffs on cotton imports led to falling domestic prices and significant losses for farmers. Economists argue that increased food imports reduce rural employment and exacerbate unemployment. In India, agriculture is not merely an economic sector; it is the primary source of rural livelihoods, a pillar of social stability, and the backbone of food security. About 45 percent of India’s population depends directly or indirectly on agriculture (World Bank, 2023). While agriculture and allied sectors contribute around 18 percent to GDP, their share in employment is far higher. Any trade agreement affecting agriculture is therefore also a social and political decision.

The starkest difference between Indian and American farmers lies in subsidies and infrastructure. According to the OECD’s Producer Support Estimate (PSE), the United States provides substantial support to agricultural production. The Agricultural Resource Management Survey (2020) shows that an American farmer receives an average annual subsidy of $66,314. Additionally, the U.S. government has announced extra support of $12 billion under the “Farmers Bridge Assistance Program” for 2026. This protection insulates American farmers from market volatility and enables them to sell produce at lower prices. Indian farmers, by contrast, face limited subsidies, inadequate irrigation, weak storage infrastructure, and unstable markets. FAO studies show that the income of small farmers in India is 10 to 15 times lower than that of farmers in OECD countries. MSP frequently fails to translate into actual market prices, with farmers often receiving 30–40 percent less. Competing with heavily subsidised American products under these conditions is extremely difficult.

The agreement also raises concerns about genetically modified (GM) crops. American agriculture is heavily dependent on GM varieties, while India continues to debate their social, environmental, and health implications. If free trade facilitates the entry of GM food products, it could undermine food sovereignty—the right of a country to control its own food system. Increased dependence on multinational corporations and foreign producers could weaken national food security and rural autonomy.

Globally, the agreement is being viewed as part of an emerging trade order. The U.S. administration’s trade policy has relied heavily on pressure and power-based negotiations, which many analysts argue undermine WTO principles. As weaker countries are compelled to comply, a global order is taking shape in which powerful nations dictate the rules. This trend poses serious risks for developing countries. India must safeguard its strategic autonomy while engaging in trade, or its agricultural sector could become a pawn in global geopolitical strategies.

Ultimately, whether the India–US trade agreement proves mutually beneficial or deeply unequal will depend on its final terms. With adequate safeguards, subsidy reforms, infrastructure investment, and market protections, free trade could offer opportunities. However, if markets are opened without protecting local farmers, the agreement could pose a historic threat to rural India. Agriculture is not merely an economic activity; it underpins social stability, democracy, and national security. Trade agreements must therefore be evaluated not only through economic metrics but through their impact on farmers’ lives. The gains of free trade may be visible in cities, but if villages bear the cost, development will remain incomplete and unjust.