Slashing food tariffs: A risky bet

Why NITI Aayog's push for US market access could hurt India's food security

- AJAY SRIVASTAVA

A recent NITI Aayog paper recommends sweeping tariff cuts on a range of agricultural imports from the United States — including rice, dairy, poultry, corn, apples, almonds, and genetically-modified soya — as part of the proposed India-US Free Trade Agreement.

The paper, titled "Promoting India-US Agricultural Trade under the new US Trade Regime," was published in May. We look at its key recommendations and what they could mean for India's food security. Let's start with rice — India's staple food across states.

Rice: The paper suggests scrapping import tariffs on US rice, as India already exports large amounts of rice and hence faces little risk from imports. While this argument sounds reasonable at first glance, it overlooks a costly mistake India made in the past.

In the 1960s and early 1970s, India faced food shortages and depended on US food imports under PL-480 — a US law that allowed surplus food to be sold or donated to countries like India.

During global trade talks (Kennedy and Tokyo Rounds of General Agreement on Tariffs and Trade or GATT, 1964-1979), India — then a major food importer— agreed to US proposals to lock its tariffs at zero on key staples like rice, wheat, and skimmed milk powder. This meant India gave up the right to raise tariffs on these items in the future.

Later, the Green Revolution significantly boosted India's farm output, and by the early 1990s, the country had become self-sufficient in rice and wheat. Indian farmers now needed tariff protection from cheap, subsidized imports — but the old GATT commitments left India unable to raise tariffs. The only legal option was to renegotiate under GATT's Article XXVIII, which India did in the 1990s.