India has consistently been a net exporter of agricultural goods, shipping more farm produce overseas than it imports for decades now. In sharp contrast, the broader merchandise sector—including engineering, textiles, and manufacturing—has struggled to gain momentum, revealing structural weaknesses outside agriculture.
In FY 2024–25, exports from India’s farm and allied sectors rose 6.47 per cent to USD 51.91 billion, even as total merchandise exports remained flat at USD 437 billion. This performance underscores agriculture’s role as a stabilizing force in India’s external trade. Looking ahead, farm exports are projected to cross USD 55 billion in FY 2025–26, signalling a strong upward trajectory.
The export basket remains diverse: rice (both basmati and non-basmati), seafood, spices, buffalo meat, coffee, fruits, vegetables, and processed foods dominate. Notably, non-basmati rice shipments jumped 43 per cent last year despite regulatory curbs. Emerging categories such as organics (+35 per cent), dairy (+54 per cent), and coffee (+40 per cent) reflect a growing competitiveness in niche, high-value markets.
Yet, the agricultural trade surplus has narrowed. Rising imports of edible oils, pulses, and fruits have eaten into gains, nearly halving the surplus over the past decade.
Merchandise Exports: A Stalled Engine
Outside agriculture, India’s merchandise exports remain subdued. In June 2025, exports grew a negligible 0.05 per cent to USD 35.14 billion, while imports contracted by 3.7 per cent, largely due to weaker commodity prices. Electronics, particularly smartphones, stood out with a 47 per cent surge as exporters raced ahead of U.S. tariff hikes. However, downturns in gems, jewellery, and petroleum products offset these gains.
This contrast highlights agriculture’s importance as both a growth engine and a trade balancer.
The Tariff Shock: U.S. Trade Tensions
In mid-2025, former U.S. President Donald Trump announced a 25 per cent tariff on Indian imports—including food products—effective August 1, 2025. With Indian agri-food exports to the U.S. valued at USD 1.95 billion in FY 2024–25, this move threatens key products such as basmati rice, dairy, herbal products, and processed foods. Nearly 873,000 metric tonnes of shipments could be at risk, directly impacting farmers, processors, and exporters.
Industry fears range from order cancellations to reputational damage for premium brands like basmati rice and Ayurvedic products, which rely heavily on quality perception.
Tariff Disparity: Root of the Dispute
The U.S. move is linked to claims of “unfair” trade practices. India maintains some of the world’s highest agricultural import tariffs—39 per cent on average (simple), and 65 per cent trade-weighted—compared with the U.S. at 5 per cent and 4 per cent respectively. This mismatch, coupled with India’s frequent export restrictions and its Minimum Support Price (MSP) policy, has long been a friction point.
Beyond Tariffs: Non-Tariff Barriers
Even without new tariffs, Indian exporters face hurdles. Strict sanitary and phytosanitary (SPS) standards and technical barriers (TBT) in developed markets have curtailed access. The EU has banned certain Indian rice and tea consignments over pesticide residues, while Japan enforces zero-tolerance rules on pests for cut flowers.
Meanwhile, subsidies in advanced economies skew competition. The U.S., for instance, provides subsidies averaging USD 61,000 per farmer annually, dwarfing India’s USD 282. Such disparities put Indian producers at a systemic disadvantage.
Safeguarding Indian Agriculture: Government Responses and Strategic Pathways
Strengthening Farmer Protection
India’s government continues to rely on the Minimum Support Price (MSP) system as a safety net for key crops. Though often criticized internationally, MSP ensures price stability for millions of smallholders, especially in cereals and pulses. To complement MSP, the government is expanding the Pradhan Mantri Fasal Bima Yojana (PMFBY) crop insurance scheme, which now covers over 50 million farmers against yield loss due to climate shocks or market volatility.
Reducing Import Dependence
Heavy reliance on edible oil and pulses imports remains a major vulnerability. To address this, India has launched the National Mission on Edible Oils–Oil Palm (NMEO–OP) to boost domestic oilseed and oil palm cultivation. Similar efforts are being made under the National Food Security Mission (NFSM) to increase productivity in pulses, millets, and coarse cereals. These measures aim to curb import bills while strengthening food security.
Boosting Value-Added and Processed Foods
To capture more value in global markets, India is scaling up investment in food processing. The Production Linked Incentive (PLI) scheme for food processing supports exporters of ready-to-eat and processed foods, while the Mega Food Parks scheme provides integrated infrastructure for storage, processing, and logistics. This helps farmers move up the value chain, reducing reliance on low-margin raw exports.
Diversification into Climate-Smart Crops
India is actively promoting millets and other climate-resilient crops as both a nutritional and export opportunity. Declared the “International Year of Millets” in 2023, these superfoods are being marketed in Africa, the Middle East, and Western markets for their health benefits and low carbon footprint.
Compliance and Quality Upgrades
To meet rising global standards, the Agricultural and Processed Food Products Export Development Authority (APEDA) has been tasked with enhancing traceability, pesticide monitoring, and SPS/TBT compliance. Pilot projects are being rolled out in basmati, tea, and organic farming clusters to certify farms against international norms, reducing the risk of export rejections.
Market Diversification and Trade Diplomacy
Recognizing the overdependence on a few markets like the U.S. and EU, India is negotiating bilateral trade agreements with the UK, UAE, and Australia that include agriculture as a focus area. Engagement at the WTO and platforms such as BRICS and G20 is also being used to lobby for fairer trade rules and protection against unjustified non-tariff measures.
Farmer Empowerment and Agri-Tech
On the domestic front, initiatives like the e-NAM (National Agriculture Market) digital platform are helping farmers secure better prices through wider market access. Simultaneously, agri-tech startups are being encouraged to provide AI-driven crop advisories, logistics optimization, and direct-to-market solutions that reduce middlemen and improve farmer earnings.
Domestic Export Restrictions: A Self-Inflicted Risk
To curb food inflation, India has repeatedly banned or capped exports of wheat, sugar, onions, and rice. While effective domestically, these policies undermine India’s reliability in global markets, encouraging buyers to diversify away from Indian suppliers.
Risks and Implications
The tariff shock, combined with structural challenges, could trigger:
- Loss of U.S. market share to competitors such as Vietnam, Thailand, and Brazil.
- Lower farm-gate prices, reducing rural incomes.
- Supply chain disruptions, with rerouted logistics and cancelled contracts.
- Brand damage, particularly for premium products like basmati rice and herbal exports.
Navigating the Turbulence: Strategies Ahead
Diversification & Diplomacy
India must broaden its agri-export footprint in regions such as Africa, Southeast Asia, and the Middle East. At the same time, proactive diplomacy—both bilaterally and at the WTO—will be vital to negotiate tariff reductions and defend developing-country flexibilities.
Upgrading Standards & Infrastructure
Investment in compliance systems, SPS/TBT certification, and export-oriented clusters is critical. Building robust supply chains, enhancing traceability, and supporting agri-tech innovation can improve resilience. Promoting superfoods, organics, and climate-smart agriculture can also expand India’s niche appeal.
Policy Coherence
Reducing the frequency of export bans and creating stable, predictable trade policies will build importer trust. Establishing real-time market intelligence units can help exporters anticipate risks and adapt strategies swiftly.
Conclusion: Sustaining the Agri Export Momentum
Agriculture remains one of India’s few bright spots in external trade, with exports set to achieve record markets even as merchandise trade stagnates. But the sector’s progress is under pressure from U.S. tariffs, stringent standards abroad, and India’s own policy unpredictability.
To preserve momentum, India needs a dual strategy: assertive global diplomacy to counter external barriers, and domestic reforms to strengthen competitiveness and reliability. With diversification, compliance upgrades, and coherent policies, India can safeguard its farmers, maintain export growth, and solidify its position as a leading global supplier of agricultural products.