Impact of FTAs on Indian Agriculture: US, EU, UK Agreements Explained

India is negotiating free trade agreements (FTAs) with the United States, European Union, and United Kingdom. These deals aim to reduce tariffs and open markets for agricultural products on both sides. Recent news highlights India pushing for exemptions (for example, seeking to avoid new US tariffs) and speeding up talks with the EU and UK on farm goods. At the same time, India is eager to export more farm produce like spices, cereals, and horticultural items. The outcome will shape trade flows: export earnings and import pressures. In brief, these FTAs could expand market access for Indian farmers while also exposing them to cheaper foreign produce, affecting prices, incomes, and policy choices.

What are the FTAs (with US, EU, UK)?

• FTA definitions and scope: A free trade agreement eliminates or cuts tariffs on goods between signatory countries and often includes rules on standards and investments. India’s FTAs with the UK, EU, and US focus on goods (including agricultural products) and may extend to services and other areas.
• India–UK FTA (May 2025): Concluded on May 6, 2025, this deal eliminates tariffs on 99% of Indian exports to the UK (including many processed foods, textiles and farm products) while India agreed to cut or remove duties on about 90% of UK exports. For instance, duties on UK whiskey and salmon will be reduced substantially. India will fully tariff-free most UK food and drink over 10 years (e.g. Scotch whisky from 150% to 40%). Meanwhile, the UK will eliminate tariffs on almost all Indian exports like garments, rice, spices, and processed foods.
  • Example: India commits to cut tariffs on UK lamb and whiskey, while the UK will make Indian mango pulp, basmati rice, and textile exports tariff-free.
• India–EU FTA (ongoing): Negotiations resumed with an aim for an early harvest deal by mid-2025 (addressing some tariffs and standards), followed by a full FTA by 2025-end. The EU is asking India to cut high tariffs on EU wines, cheese, meat, etc., while India wants better access for pharmaceuticals and IT services. Agriculture remains sensitive: India fears cheap subsidized EU wheat, milk or wine; the EU seeks cuts on Indian farm tariffs (35–60% now).
  • Example: The EU could press India to lower tariffs on wines and chocolates, whereas India would push for quotas or protections on staples like rice or pulses.
• India–US FTA (ongoing): India and the US have agreed on terms of reference and are negotiating phases: an interim trade deal by mid-2025 and comprehensive FTA later. India has signaled willingness to slash tariffs on many US farm imports (like beef, poultry, fruits, juices – currently taxed up to 100%), offering cuts on about 90% of tariff lines immediately. Controversial items like soybeans and corn are planned for later phases. In return, India seeks tariff benefits on labour-intensive exports (textiles, leather, etc.) and continued market access for its pharmaceuticals and engineering goods.
  • Example: India proposes reducing duties on US frozen poultry and berries (from ~30–100% down to 0–5%), while asking the US to ease tariffs on Indian textiles or surgical instruments.

Why pursue these FTAs?

• Expand export markets: India aims to increase farm exports (rice, spices, tea, etc.) by gaining preferential access. For example, tariff-free entry to the UK and EU could boost exports of basmati rice, mangoes, and processed fruits. The UK deal is projected (by UK government estimates) to raise UK-India trade by about £25 billion, some of which may be Indian agri exports.
• Diversify trade links: By deepening trade with US/EU/UK, India reduces reliance on a few markets (like traditional buyers in Middle East or Asian neighbors). Geopolitically, stronger economic ties with Western nations align with India’s Indo-Pacific strategy. All three partners are strategic allies; FTAs reinforce these bonds and counterbalance rising trade blocs in Asia.
• Leverage strength and obtain concessions: India can push for better terms in sectors where it has strengths. For instance, India’s global leadership in generic drugs and tech services can be used to negotiate reciprocal benefits (though focusing on farm trade, a strong overall deal strengthens Indian negotiating power). India also wants to safeguard its interests, e.g. securing support for its self-sufficiency programs under WTO rules.
• Respond to global trends: Many countries (like UK post-Brexit) actively seek new trade deals. If India abstains, it might lose out. Others (US/EU) are limiting trade (tariffs on steel, etc.) and seeking allies. FTAs can help navigate tariff wars or supply chain disruptions (e.g. US imposing farm tariffs, EU’s carbon border taxes).
• Potential domestic gains: FTAs could mean access to cheaper inputs (like feed grains, oilseeds), lowering costs for Indian food processors. Also, foreign investment may flow into Indian agribusiness under the FTA frameworks, modernizing supply chains.

Who are the stakeholders?

• Indian government: The Commerce Ministry, Agriculture Ministry, and PMO drive negotiations. They balance export promotion, farmer welfare, and geopolitical goals. States (like Punjab, Maharashtra) and their farmers lobby, as their crops can be affected.
• Farmers and producers: Millions of farmers (large and small) are key stakeholders. Export-oriented farmers (rice, spices, sugarcane, cotton) may benefit, while those producing items subject to higher import exposure (like pulses, dairy) worry about competition.
• Agri-industry and traders: Companies handling export (packagers of fruits, spices, processed foods) support market access. Agro-processors and retailers expect cheaper inputs (nuts, oilseeds) post-tariff cuts. Trader lobbies will influence which products are protected.
• Trade partners and foreign lobbies: US farm lobby (soybean, beef, poultry, grains), EU agri and wine industries, and UK food producers each push for market access. For example, the UK NFU (farmers’ union) demanded protection for UK sugar and poultry in the India deal. Similarly, EU wine and cheese exporters want tariff cuts.
• Multilateral institutions: The WTO is a stakeholder in ensuring these FTAs comply with global trade rules. India must consider WTO commitments (MFN tariffs, notifications) while negotiating preferences under Article XXIV. Development agencies or multilateral banks might support infrastructure to handle increased trade.
• Consumers and civil society: Urban consumers could enjoy a larger variety and lower prices of foods (like dried fruits, wine, chocolate). However, NGOs may highlight risks (like GM crops entry, loss of livelihoods) and push for safeguards.

Where will the effects be felt? (Products and regions)

• Key export commodities: India’s top agri exports include rice (non-basmati and basmati), marine products (shrimp, fish), spices (pepper, turmeric), tea and coffee, cotton products, fruits and vegetables (fresh and processed), and buffalo meat. FTAs could boost some of these:
  • Rice and cereals: India is already a leading rice exporter ($12.5B value in 2024-25). Preferential access to the EU (which currently has no tariffs on rice under WTO quotas) or UK (tariff-free rice post-FTA) may increase exports.
  • Spices: India dominates global spice exports. Lower UK/EU tariffs can open markets, but also cheaper imports of some spices (pepper, cardamom) could affect domestic producers. Overall, both exports and imports of spices will rise.
  • Marine products: India exports ~$7.4B/year (mainly shrimp and fish) to US, China, EU. An FTA with the US reducing the 17.7% US tariff on Indian shrimp would boost competitiveness.
  • Horticulture: Mango pulp, grapes, pomegranates and prepared foods may find easier entry in UK/EU under FTAs, as these often have high duties now.
• Key import commodities: Imported farm goods that could see surges include:
  • Edible oils: India is the world’s largest palm oil and a major soy oil importer (~$13B/year). FTAs (with US/UK/EU) could introduce cheap canola/soybean oil and oilseeds, affecting domestic oilseeds farmers.
  • Pulses: India imports ~$5.5B in pulses (tur, urad, etc.) to meet protein needs. Under pressure from US and others, tariffs on pulses may drop, expanding imports from Canada or Australia.
  • Dairy and meat: The UK and EU have protected sectors like cheese, lamb, and pork. If India were to cut tariffs on these (some cuts are planned after safeguard periods), domestic dairy and sheep farmers may face competition. However, UK deal kept chicken, eggs, pork tariffs unchanged.
  • Sugar: India banned raw sugar exports, but imports like ethanol or special sugars could be affected. The UK-India FTA exempted concessions on sugar to protect UK beet growers, and India likely seeks safeguards for domestic sugarcane.
  • Fruits, dry fruits and processed foods: Imports of almonds, walnuts, pistachios, apples, berries (especially from US) and wines/spirits may increase if tariffs fall. UK and EU markets will send more wine, spirits, processed snacks if Indian tariffs ease.
• Domestic regions: States with export clusters (Punjab for rice, Kerala for spices, Gujarat for groundnuts and sugar, Maharashtra for bananas and grape exports) may grow trade. Conversely, pulse-growing regions (like Madhya Pradesh, Maharashtra) or dairy belts (Uttar Pradesh) could face tougher competition. Regions depending on import-substitute crops (rapeseed, mustard) might need to adjust.
• Trade corridors: Improved rail/port infrastructure (like Vizag–Chennai route for EU trade, or Kandla port for Middle East exports) will get busier. Border customs and quarantine stations at air/sea ports must gear up for higher volumes of exotic produce.

When: Timeline of negotiations and implementation

• India–UK FTA: Concluded May 6, 2025. Implementation likely phased over 5–10 years for sensitive items (as announced, 85% of tariffs cut immediately, remaining over a decade). Tariff lines for UK imports into India will drop gradually as per schedule.
• India–EU FTA: Early-harvest deal targeted by July 2025 (covering some IPR and tariff issues). Final FTA aims for end of 2025. Full implementation will involve phased tariff reductions (e.g. 10-year schedule on some products). The timeline depends on further negotiations and domestic ratifications.
• India–US FTA: An interim agreement is sought by July 9, 2025 (matching the expiry of the US’s 26% tariff suspension). A comprehensive deal is aimed before year-end. India has offered tariff cuts on many items immediately (as soon as agreement takes effect) and phased cuts later (e.g. corn/soy), similar to UK’s timeline.
• Other milestones: WTO and regional dates may interact. India, as WTO member, cannot make short-notice MFN changes; these FTAs will be notified under WTO rules once signed. Any compensatory tariff adjustments (safeguards) for sensitive commodities usually have waiting periods (6–18 months after FTA enforcement) before coming into effect.

How will it impact exports? (Opportunities for Indian farm exports)

• Tariff-free access to large markets: Major Indian exports will enter US/EU/UK markets at lower cost. Examples:
  • Rice: UK and EU could offer duty-free or reduced-duty quotas for basmati and non-basmati rice. This could boost India’s $12.5B rice export business (to West Asia, Africa currently). A FTA might allow more direct shipments to Europe and North America.
  • Spices & horticulture: Tariffs on commodities like curry powder, chilies, ginger, mint and processed fruits should drop. India exported record quantities of spices (~$9.5B total agri exports) and fruits ($2B fresh + $1.2B processed) in 2024-25. Easier market entry can drive further growth.
  • Marine and meat: India’s shrimp and fish ($7.4B exports) and buffalo meat (~$4B exports) could gain from lower US/EU duties. For instance, the US tariff on Indian shrimp would fall, making them more price-competitive. Buffalo meat mainly goes to the Middle East but could expand new markets if FTA routes are used.
  • Coffee and tea: Indian coffee (robusta beans, instant mix) might find UK/EU markets freer of import duties. India’s tea exports ($1.3B) may see modest gains, though many countries already exempted tea from duties.
  • Value-added processed foods: Indian brands of ready-to-eat foods, snacks and beverages will benefit as high tariffs ease. For example, Indian mango pulp or chutneys could enter UK supermarkets tariff-free. Minor sectors like organic products and nuts may also rise.
• Non-tariff facilitation: Along with tariffs, FTAs often harmonize standards, making exports smoother. For example, mutual recognition of phytosanitary standards or organic certifications can speed exports of fruits and vegetables.
• Export diversification: Easier access may encourage farmers to diversify into high-value crops (like kiwifruit, berries, exotic vegetables) intended for premium Western markets, if supported by logistics and agritech.
• Export infrastructure boost: To capitalize on FTAs, India will likely invest in better cold chains, packhouses, and port facilities, further enhancing export capacity. This infrastructure push benefits exports beyond the specific FTA partners.
• Quantitative boost: If India’s agri export growth, already 6% recently, accelerates under FTAs, the trade surplus (currently ~$13B) may stabilize or even widen on the export side despite higher imports.

How will it impact imports? (Competition from partner countries)

• Increased imports of high-tariff items: Many farm inputs and consumer goods from US/UK/EU will flood in at lower prices:
  • Oils and oilseeds: Cheaper soybean and canola oil from the US, and high-yield EU rapeseed oil, could enter India with minimal duty. India’s edible oil import bill (~$14B/year) may shift source composition.
  • Pulses: Canada and the US, large pulse producers, may export more lentils, peas, and chickpeas to India at reduced costs if import duties are lowered. India’s annual pulse imports (~3 million tonnes) could rise.
  • Poultry and dairy: US poultry and pork, UK lamb and Irish beef could become more competitive. Currently India has high tariffs (50-100%) on these; reductions will put pressure on local producers. However, some safeguards may delay full exposure.
  • Wine, spirits and processed foods: With duties slashed, Indian consumers may buy more US wine and spirit, UK beer and chocolate. US demand for Indian sugar will rise if Indian tariffs fall; conversely, tariffs cut on imported wheat and barley could reduce Indian prices.
  • Fruits and nuts: US (almonds, pistachios, cranberries) and EU (kiwifruit, berries) could capture a bigger share of the Indian market. India’s dried fruit imports (apricots, figs, raisins from the US) may increase.
  • Genetically modified crops: The US might push for relaxed rules on GMO corn and soy in India. If India eases biotech regulations under FTAs, cheaper GM grain imports might displace some local varieties.
• Pressure on domestic prices: As imports grow, domestic prices of comparable products could fall. For staple crops (rice, wheat, sugar, maize), India usually maintains stock limits and MSP (minimum support prices) to stabilize farmer incomes. However, consumer prices for food could decrease, affecting inflation.
• Shift in input sourcing: Farmers in India use inputs like fertilizers, machinery parts, and seeds. Some of these (e.g., herbicides from US) might see lowered tariffs, making agriculture more efficient. However, this also challenges local input manufacturers.
• Imbalance risks: Currently, India has an agricultural trade surplus (~$13B), but rising imports from developed-country producers (with large subsidies) could shrink this surplus. Careful monitoring is needed to avoid trade deficits in key food items.
• Example: Suppose Indian tariffs on almonds drop; now California almonds can undercut domestic groundnut or almond growers. This would hurt Gujarat/Maharashtra farmers unless they diversify crops or improve quality.

Significance of these FTAs for India’s farm sector

• Economic impact: Expanded export markets can raise farm incomes, rural earnings and forex inflows. For example, a 10% boost in rice exports could earn an extra $1B. Conversely, greater imports can lower input costs, benefiting food processors.
• Food security vs. availability: Lower tariffs on staples (like rice, wheat, pulses) could help mitigate domestic shortfalls by ensuring steady imports. However, too much openness might threaten self-sufficiency ambitions (a key political goal in India).
• Price stabilization: More sources of imports mean less volatility. If drought hits India, imported grains can stabilize supply. However, domestic producers might get lower prices (good for consumers, bad for farmers).
• Rural livelihoods: NTAs (non-tariff adjustments) in FTAs may require India to ease some smallholder protections. This could push farmers toward high-value or exportable crops. A positive side is modernizing agriculture with advanced technology and better seeds to compete globally.
• Global standing and negotiation leverage: Concluding FTAs elevates India’s status as a major trading nation. It also gives India a seat at global trade discussions (e.g. it uses these as bargaining chips at WTO talks). Aligning standards (GIs, SPS) with partners may also boost Indian exports (e.g. more GI recognition abroad).
• WTO compliance and precedents: Under WTO rules (Article XXIV), FTAs are allowed if they cover “substantially all trade.” These deals set precedents: India may liberalize more unilaterally, and negotiate similar deals with other countries (like Canada, Australia).
• Sectoral shifts: Some sectors may shrink (e.g. maize or sunflower farmers face cheap US/EU imports), while others expand (export crops). Over time, crop patterns across India may change, aligning with global comparative advantages.
• Consumer benefit: Indian consumers gain access to a wider variety of food products (cheese, nuts, wine, pork) at lower prices. This can improve nutrition and diet diversity (though also shift tastes).
• Macro impact: Trade growth can help meet India’s ambition to be the third-largest economy. Boosting agri exports contributes to GDP and rural development (agriculture is ~17% of India’s GDP and employs ~50% of the workforce).
• Geopolitical dividends: Stronger economic ties with Western partners may lead to more investment in agriculture (joint ventures, tech transfer) and cooperation on climate-smart farming (as part of IPEF or climate initiatives).

Limitations of the FTAs

• Selective coverage and sensitive lists: India will retain high tariffs on truly sensitive items. For example, staples like rice or sugar might have phased tariff cuts, and crops like pulses might be on a restricted list. Hence, not all imports will flood in immediately.
• Gradual implementation: Though headline numbers (90% goods tariff-free) sound large, actual duty elimination often follows a 5-10 year schedule for many products. The full impact will take years to materialize.
• Non-tariff barriers remain: Even with low tariffs, foreign products face sanitary and phytosanitary inspections in India. The speed of approvals for new varieties or plant imports will determine how much comes in.
• Infrastructure bottlenecks: Indian ports, cold storages and logistics may not immediately handle sudden volume increases, delaying some potential trade gains until capacities improve.
• Domestic policy constraints: India’s Minimum Support Price (MSP) scheme and public stockholding for food security are not part of FTAs, but any change in production driven by trade may indirectly affect those policies.
• Demand variability: Even with tariff cuts, actual demand for some imports might be limited. Indian farmers might not switch immediately if domestic consumption habits persist (for instance, high-priced local produce still preferred by some consumers).
• Reciprocity limits: While India cuts tariffs on US/EU/UK imports, the reciprocal access granted may not fully balance. For example, the EU often has tariff rate quotas or protects dairy tightly. Some critics argue UK-India was lopsided (though NFU felt it was balanced).
• Global commodity prices: FTAs don’t fully shield India from world market swings. If global prices fall, domestic prices drop anyway. For instance, if EU floods markets with subsidized wheat, Indian farmers suffer regardless of tariff.
• Regulatory differences: Alignment of standards is complex. Even with trade deals, differing rules on GMOs or organic standards may block some imports unless resolved.
• Political considerations: FTA terms could be renegotiated or stalled due to elections or policy shifts. Thus, promised benefits may change over time.

Challenges and concerns

• Farmer protests: Indian farmers have historically resisted trade deals (fear of cheap imports). Massive protests against WTO constraints or previous FTA talks (like with the US a decade ago) can occur if big farm lobbies feel threatened. Ensuring buy-in or compensation is a major challenge.
• Protecting vulnerable groups: India’s small and marginal farmers may lack capital to upgrade quickly. Without support (training, credit, insurance), they could suffer from increased competition. Ensuring rural equity is a concern.
• National food security: India must maintain buffers for staples. FTAs should allow it to stockpile rice, wheat, sugar, etc., without breaching international commitments. Designing safeguard mechanisms (tariff-rate quotas, emergency duties) that comply with WTO and FTA rules is tricky.
• WTO rule compliance: FTAs are permitted only if more trade is liberalized than restricted. India needs to ensure that any new tariff bindings or SPS measures fit within WTO commitments. Deviating or introducing hidden barriers can lead to disputes.
• Standards and quotas: Meeting stringent quality or environmental standards (e.g. EU deforestation-free requirement on imports) may require Indian farmers to adapt production methods. Upskilling producers to meet these standards is a non-trivial task.
• Balancing domestic prices: Opening markets could push local market prices down for some crops, affecting incomes. India must balance export gains with domestic price stability (for example, if pulses floods the market, even non-exporting farmers see lower prices).
• Political opposition: Some political parties or state governments might oppose tariff cuts that they view as harmful to their local producers. This can delay ratification or lead to compromises that weaken FTA outcomes.
• Transition costs: Shifting crop patterns or modernizing agriculture requires investment. Farmers might need subsidies or credit for irrigation, storage or processing units to be competitive internationally.
• Quality and standards gap: Indian produce often needs better grading or packaging to meet Western retail standards. Bridging this gap is challenging and requires capacity building.
• Geopolitical uncertainties: US protectionism or EU climate policies could change. An FTA’s benefits might be undermined if, for example, the US reinstates tariffs or the UK abandons commitments after an election. Firms face regulatory risk.

Way forward (Strategies and policy measures)

• Safeguard measures: India can negotiate tariff-rate quotas that allow limited imports at low duty and higher rates beyond. For example, a small amount of duty-free dairy import before a steep tariff kicks in. Safeguards and anti-dumping duties must be kept ready (within WTO limits) to protect critical segments like sugar or poultry if imports surge.
• Phased market opening: Continue gradual cuts with long transition periods for sensitive items. Gradually align India’s tariffs to avoid shock to producers, while seeking early liberalization where domestic production is strong (e.g. spices, tropical fruits).
• Strengthen agri-infrastructure: Invest in cold chains, testing labs, and logistics hubs so Indian exporters can meet quality standards. For imports, bolster quarantine capacity to prevent pest/disease risks with higher trade.
• Boost farm productivity: Increase research and extension services for crops likely to face import competition (e.g. pulses, oilseeds, cotton). Promote high-yield varieties and better farming practices to reduce cost gaps.
• Promote value addition: Encourage food processing industries (packaging, ready foods) that use local crops and can compete internationally. This increases farm share in global value chains.
• Diversify crop portfolio: Guide farmers to gradually shift from low-value to high-value crops (horticulture, medicinal plants, specialty grains) where India has export potential and lower import threat.
• Insurance and credit: Offer crop insurance and low-interest loans for sectors exposed to volatility from FTAs. For example, if dairy faces new competition, support dairy cooperative modernisation to increase productivity.
• Leverage WTO flexibilities: Use allowed policy tools (Green Box subsidies, development programs) to support farmers. If WTO rules hamper some policies, pursue waivers or negotiate at WTO (as India successfully did for food security).
• Regional cooperation: Align with neighboring countries and blocs (SAARC, BIMSTEC) to strengthen regional trade that complements these FTAs, reducing over-dependence on any single market.
• Domestic reforms: Simplify land leases, marketing, and logistics rules to make Indian agriculture more efficient. FTAs highlight the need for reforms (e.g. the new agri-FTA packages to ensure competitiveness).
• Public awareness and stakeholder dialogue: Keep farmers and state governments informed about FTA benefits and support programs. Early consultations can preempt protests. Trade unions should understand that export growth may secure more farm jobs than unilateral liberalization.
• Monitor and adapt: Use data and feedback loops to watch which sectors suffer and thrive. If certain imports hurt domestic industries unexpectedly, policymakers should revisit tariffs or provide compensation. Similarly, fast-track support to sectors gaining exports to cement growth.

Conclusion

In sum, FTAs with the US, EU, and UK can be a double-edged sword for India’s agriculture. On the one hand, they promise expanded export opportunities for competitive crops and inputs for processing industries, potentially boosting farmers’ incomes and economic growth. On the other hand, they open Indian markets to cheap foreign agricultural goods, posing challenges to domestic producers of pulses, oilseeds, dairy and other sensitive crops. The ultimate impact depends on careful implementation: India must judiciously phase in tariff cuts, maintain food security safeguards, and support farmers in adapting. Geopolitically, these FTAs deepen India’s ties with Western economies, aligning with its strategic goals. By balancing market access with protective policies and productivity enhancements, India can harness the benefits while mitigating the downsides. The onus will be on policymakers and farming communities to navigate this transition, ensuring that the agriculture sector remains robust amid evolving trade rules.

Practice Question: Critically evaluate how India’s FTAs with the US, EU, and UK could reshape domestic agricultural price structures, trade balances, and rural livelihoods in the long run. (250 words)