India has completed a comprehensive review of its agricultural tariff regime and is considering rationalizing import taxes in sectors where domestic farmers would be least affected. The move is also aimed at fostering mutually beneficial trade relations with the United States, according to two officials who spoke on condition of anonymity.
The state-owned think tank, Niti Aayog, evaluated the potential impact of U.S. President Donald Trump’s proposed reciprocal tariffs on the Indian economy, particularly in the farming, fisheries, and dairy sectors. One official noted that the review concluded tariff rationalization would benefit India independently of U.S. pressure. “Lowering and rationalizing tariffs on agricultural commodities will enhance overall trade and improve India’s export market access in the U.S. and North America,” stated the review, as seen by Jordbrukare India.
India’s primary agricultural exports to the U.S. include rice, spices, dairy, and poultry products. The commodities most likely to be affected by tariff adjustments include seafood, rice—where India is the world’s leading exporter—and guar gum, a high-value product used in the U.S. fracking industry.
The review highlighted that India’s weighted average agricultural tariff stands at 37.66%, significantly higher than the U.S. rate of 2.59%, creating a 32% tariff differential that may face scrutiny from American trade authorities.
A January 2025 paper by the U.S. Trade Department emphasized the need for India to reduce tariffs on key American exports such as wheat, corn, nuts, bourbon whiskey, and apples. The report noted that despite India’s rapid economic and population growth, high tariffs continue to limit U.S. export expansion in the Indian market.
While India has lowered some basic customs duties in its Union Budget, a recent White House statement asserted that Indian tariffs on agricultural goods remain “substantially higher” than U.S. duties on Indian products. Economists warn that India’s $41-billion trade surplus with the U.S. leaves it vulnerable to retaliatory tariff measures from Washington.
The U.S. is a significant importer of Indian seafood, with marine product exports reaching $2.58 billion in 2023-24. Any additional U.S. tariff of 32.4% on Indian seafood, especially shrimp, would severely impact trade, said former agriculture secretary Siraj Hussain. In 2022-23, seafood exports were even higher, totaling $3.56 billion.
Rice exports, a crucial source of foreign exchange, could also be at risk. In 2023-24, India exported basmati rice worth $304.78 million and non-basmati rice worth $45.1 million, with a significant portion serving the Indian diaspora in the U.S. Guar gum, another high-value export, saw shipments worth $106 million to the U.S. in 2023-24. Any reciprocal tariffs on this commodity would negatively affect farmers in Rajasthan and Gujarat.
“India has faced Trump’s tariffs before, and that experience will be useful,” said the second official. During Trump’s first term in 2018, the U.S. imposed additional tariffs of 25% on steel and 10% on aluminum, reducing India’s steel exports to the U.S. by 35% in 2018-19. In response, India levied a 20% additional duty on U.S. apples and walnuts and ₹20 per kg on almonds. Diplomatic trade negotiations eventually helped restore the earlier tariff regime.
A recent analysis by the State Bank of India suggests that a hypothetical 20% flat tariff on Indian exports by the U.S. could reduce India’s GDP growth by 50 basis points. An average tariff hike of 15%-20% could lead to a 3-3.5% decline in overall Indian exports to the U.S.
As India weighs its options, policymakers remain focused on ensuring that any tariff adjustments serve its long-term economic interests while maintaining strong trade relations with the U.S.