Indo-US Trade: Global integration meets rural anxiety

While the 2026 Indo-US Interim Trade Agreement is framed as a strategic balance between global integration and rural protection, it has also sparked intense criticism over fears that domestic producers may lose their competitive edge and market share on their own home soil. 

For the Indian government, the deal is a landmark victory that secures a 0%–18% tariff window into the $30-trillion American market, a significant de-escalation from the 50% punitive duties that had crippled exports in late 2025. 

As the official agreement between New Delhi and Washington is finalised, it is becoming clear that the deal will help some Indian farmers while hurting others, triggering both hope in the spice gardens of the south and anxiety in the grain belts of the north. 

While, on the winning side, according to traders and farmers, the deal provides an unprecedented ‘green channel’ for Indian horticultural and high-value products. “Small-scale farmers of spices, tea, coffee, and cashews, along with growers of fresh mangoes, guavas, and avocados, will now enjoy zero-tariff access to American consumers,” they noted. 

S. Rethinavelu, founder and president, Agri and All Trade Chamber, said, “This shift not only boosts farmer realisations but also gives India a sharp competitive edge over regional rivals like Vietnam and China. Furthermore, the Indian poultry and livestock sectors are set to benefit from the opening of a specific window for animal feed.” 

By allowing limited imports of US-grown red sorghum and Distillers Dried Grains with Soluble (DDGS), the deal addresses a domestic deficit that has long kept feed costs high, promising more stable prices for milk, eggs, and meat for the urban consumer, he added.  

However, according to farmers’ organisation leaders like P. R. Pandian, the Green Channel for some has created a concern for others. “The decision to allow DDGS—a protein-rich by-product of US ethanol production—has hit a raw nerve among India’s soybean and maize farmers in States like Maharashtra and Madhya Pradesh,” he added.  

The farmers fear that a flood of cheap, subsidised American feed will crash domestic prices, rendering their crops uncompetitive.  

“While the government has kept a strict ‘negative list’ to shield staples like wheat, rice, and pulses, and maintains a firm ban on Genetically Modified (GM) grains for human consumption, critics argue that importing GM-derived feed like DDGS is a ‘backdoor entry for American biotech giants that could eventually compromise India’s non-GM food integrity,” he added.  

The horticultural sector presents its own set of contradictions, another farmers’ leader noted.  

The logo of Agro Food Trade Centre in Madurai Photo .
| Photo Credit:
G. MOORTHY

“Apple and walnut growers in Jammu and Kashmir and Himachal Pradesh find themselves in a precarious middle ground. While the deal avoids a zero-tariff regime for US apples—opting instead for a 25% duty and a Minimum Import Price (MIP) of ₹80/kg—local orchardists argue that even this reduced barrier could ruin marginal farmers already struggling with rising input costs and climate volatility,” he elaborated.  

At the same time, for exporters like K. Thirupathi Rajan, Chairman of Raj Exim Group of Companies, the move by the US government has pushed Prime Minister Narendra Modi to diversify the export opportunities to other countries like United Kingdom, European Union, Russia, among others.  

“Also, as farmers fear that the deal would open doors for the American market in India, the draft has also clearly stated the exclusion of sensitive agricultural staples—including wheat, rice, maize, and dairy—from any tariff concessions, ensuring that India’s core food security and rural livelihoods remain protected from large-scale US imports,” he added. 

Though the US was once considered the only option for large-scale exporters, the sudden collapse of their opportunity—triggered by the 50% punitive tariffs in late 2025—made them explore options in other untouched areas like Latvia, Lithuania, and Estonia, among others, where the scope was wider and the market appetite for Indian high-tech engineering, organic chemicals, and specialized textiles offered a more stable and diverse revenue stream away from the volatility of North American trade policies, Mr. Thirupathi Rajan said. 

“And, some of the other initiatives like initiating trade with Russia in Indian currency has also helped us insulate our exporters from the volatility of the US dollar and Western banking sanctions, allowing for the steady settlement of payments through Special Rupee Vostro Accounts (SRVAs) even when traditional global payment networks are restricted,” he added. 

Ultimately, the true success of this agreement will not be measured in the halls of Washington or New Delhi. Instead, it depends on whether the gains for spice and fruit exporters can outweigh the losses for oilseed and grain farmers.  

As the two nations move toward a full Bilateral Trade Agreement, the Indian government faces a difficult challenge. It must ensure that its goal of ‘Atmanirbhar Bharat’ does not suffer because of its global ambitions, Mr. Rethinavelu noted.  

Published – February 15, 2026 09:02 pm IST