Agriculture: Vital to the US but in need of vitality here

India is now among the countries facing the highest country-specific import tariffs imposed by the current US government.

- HIMANSHU

A steep 25% duty has been levied on Indian exports to the US, one of the highest among our competitors and neighbours. This is likely to rise to 50% from next week, when an add-on penalty for our trade relationship with Russia—mainly our purchases of crude oil—is scheduled to come into play. The fate of this punitive duty seems to depend on a host of factors, with the outcome of US-Russia negotiations on Ukraine possibly part of Washington's calculus. But an important factor acting as an impediment to the successful closure of an India-US trade agreement is agriculture. Some observers suggest that America's additional duty of 25% over and above the initial 'reciprocal' levy of 25% is only partly attributable to New Delhi's trade ties with Moscow. The real motive behind the move may be to penalize us for the country's reluctance to lower import tariffs on agricultural goods.

For the US, access to the Indian market for its agricultural produce is an important demand. Although less than 2% of American workers are directly engaged in agriculture, with its contribution to US GDP under 1%, agriculture accounts for 8.4% of America's goods exports. Almost a fifth of all US agricultural produce is exported. Moreover, farm exports have been a major reason for price stability in its domestic markets for these items. It has also been an important source of income for US farmers. Agricultural exports as a percentage of total farm cash receipts were less than 15% in the 1960s, but now account for almost a third.