Threat to farm sector real but may be overstated

AS THE THREAT of reciprocal tariffs by the US has put pressure on New Delhi to slash import tariffs for the world's largest economy on a bilateral basis, the highest concerns are being raised with regard to India's "sensitive" agriculture sector.

- SANDIP DAS & ARUNIMA BHARADWAJ

But some experts say the fears about India's farmers being adversely affected by tariff cuts on imports may be exaggerated, while others are more wary of tariff reliefs to the US.

"Almost 80% of Indian agriculture is reasonably competitive. We are a net exporter of agricultural produce over the last 20 years," says Ashok Gulati, agricultural economist and former chairman, Commission for Agricultural Costs and Prices (CACP).

He stresses that there isn't enough rationale for India agri-tariffs being kept "unduly high." For example, India is the largest rice exporter in the world, and yet the import duty on it is as high as 70%.

"Slashing it down to 10 to 15% will not pose a threat to Indian farmers," Gulati adds. Similarly, there are several other commodities where tariffs can be reduced by 50% without any adverse impact on agriculture.

"Some of the highest duties are on alcoholic beverages and tobacco products, such as whiskey, vodka, rum, sparkling wine, and cigars, which face duties as high as 150%.

Key agricultural products like walnut, honey, coffee, green tea, and sugar face 50-100% duties.

It doesn't make sense to maintain such high tariffs in all these cases, although there may be some sensitive cases," Gulati argues.

Former chief statistician Pronab Sen expresses a slightly different point of view.

"(If Trump's insistence on bilateral deals with every country prevails) then it's going to be mercantilism at its worst.

Our strategy in such case should be balanced.

We should certainly be wary of reducing tariffs on the sectors that need protection, such as agricultural goods," Sen says.