E-Paper
US duties and India’s rural distress
This article is authored by Gunwant Singh, scholar, international relations and security studies, Jawaharlal Nehru University, New Delhi.
The recent escalation of US tariffs on Indian exports has dramatically reshaped India’s trade landscape, casting a long shadow over the agricultural sector in particular. What began as a geopolitical tussle over energy procurement and strategic autonomy has now evolved into a direct economic confrontation with far-reaching consequences. The US’ decision to impose steep duties pushing overall levies on many Indian agricultural goods to around 50% has forced India to confront uncomfortable realities about the vulnerabilities in its farm export ecosystem. For a country where agriculture remains both a crucial source of livelihood and an important pillar of foreign trade, the impact of these tariff walls is neither symbolic nor distant. It cuts deep into the income of farmers, the viability of agro-industries, and the confidence of rural producers whose stability depends on predictable market access abroad. The Indian agricultural sector is not merely a supplier of domestic food demand; it is also a major exporter of high-value goods whose competitiveness hinges on the ability to access global markets at stable and predictable cost structures. The US tariff shock, therefore, presents an important opportunity to examine how domestic agriculture absorbs global trade headwinds and what India must urgently do to mitigate its exposure to such external disruptions.
Among the agricultural segments most severely hit, shrimp stands out as the hardest-affected. Over the past decade, India has emerged as one of the world’s leading suppliers of farmed shrimp, with the US being its single largest market. The new tariffs immediately erode India’s price advantage, at a time when farmers were already struggling with high feed costs, disease management challenges, and strong competition from producers in Southeast Asia and Latin America. Shrimp aquaculture is concentrated in coastal belts, particularly Andhra Pradesh, Odisha, and parts of Gujarat, where thousands of small farmers depend on export-linked revenues. The sudden drop in US demand risks leaving farmers with unsold stock or compelling them to sell at deeply discounted rates. Cold storage and processing chains, which already operate with thin margins, are similarly strained. The broader effect extends to employment across hatcheries, ice plants, transporters, feed companies, and export-oriented processing units. In many coastal blocks, shrimp farming plays a vital role in sustaining local economies; weakening this sector thus has wider social and economic repercussions.
Basmati rice, another flagship Indian export, has also been pulled into the dragnet of economic retaliation. Premium rice varieties, especially basmati grown in Punjab, Haryana, and western Uttar Pradesh, have long relied on overseas markets to fetch prices significantly higher than those available domestically. The imposition of high tariffs immediately dampens buyer interest, leaving exporters reluctant to take fresh positions and forcing farm-gate prices downward. Farmers who once counted on basmati as a remunerative crop are now experiencing shrinking margins, pushing some to revert to non-basmati paddy primarily because the minimum support price (MSP) regime offers a safety net. The fall in basmati prices has ripple effects on rural credit, as farmers who anticipated higher returns now face challenges in repaying seasonal loans taken for inputs like seeds, fertilisers, and machinery. Exporters also face uncertainty regarding inventory and contract fulfilment, which in turn impacts millers, transporters, and packaging units.
Several other agricultural sectors are also under pressure. Key spice exports such as cumin, turmeric, and isabgol now face stiffer competition since US tariffs increase the final cost of Indian goods, making imports from rival countries more appealing. Small and medium-sized companies dealing in specialised products like honey, herbal extracts, organic foods, and ready-to-eat items struggle even more; lacking significant scale or access to multiple markets, they are more vulnerable to sudden tariff hikes. Dairy, though less reliant on US exports, is also indirectly affected as the climate of uncertainty and rising input costs discourage investment in value upgrading and expansion. Overall, these tariff increases slow India’s progress in higher-value processed food exports, a sector considered crucial for its agricultural future.
However, the impact is not uniform across all agricultural categories. Some products like certain varieties of tea, coffee, and spices, benefit from chosen tariff exemptions or have limited exposure to the US market. Yet these cases represent only a small part of India’s export profile and rarely cover the most lucrative goods essential to rural economies. This partial relief does little to offset the intense stress on major exports. Moreover, even in less-affected areas, exporters still face higher cargo costs and market challenges linked to tariff-driven volatility. The central issue is not just the tariffs but also the uncertainty they create, which complicates contracts, investments, and farmers’ planting decisions.
More importantly, the tariff crisis has peeled back layers of structural fragility that have long existed in India’s agri-export machinery. Weak cold-chain infrastructure, inadequate warehousing, fragmented logistics, inconsistent quality-control systems, and limited financial access for smaller firms all diminish India’s ability to withstand global market fluctuations. When tariffs rise sharply, a resilient export ecosystem would typically divert products to alternative geographies with minimal disruption. But India’s export diversification remains constrained; although Europe, West Asia, and Southeast Asia offer possibilities, supply chains into those regions often require different specifications, certifications, and logistics. Smaller exporters in particular lack the market networks and financial buffers needed to make such pivots quickly. As a result, tariff shocks translate directly into revenue loss for farmers, rather than being absorbed across well-developed alternative channels.
Amid these challenges, the crisis also presents a strategic inflexion point. The need for deeper reforms in agricultural trade infrastructure has never been clearer. Strengthening cold storage, standardising quality controls, expanding processing capacity, improving port logistics, and enabling easier credit access for export-oriented farmers and SMEs would significantly reduce the fragility that tariff shocks expose. Additionally, a more coherent and assertive trade negotiation strategy, whether through bilateral tariff discussions, sector-specific cooperation frameworks, or broader multilateral platforms, could help protect critical export lines in shrimp, basmati, and spices. India must also accelerate its efforts to diversify export destinations, especially into emerging markets where rising incomes and shifting consumption habits present long-term opportunities.
The US tariff escalation may have been driven by geopolitical considerations, but its most immediate and tangible consequences are being felt by Indian farmers, agro-exporters, and rural workers. Sectors like shrimp and basmati, which once symbolised India’s agricultural export success, now face significant disruption. Yet this moment also underscores the urgency of building a resilient agricultural economy capable of withstanding external shocks. By investing in stronger value chains, expanding processing capabilities, negotiating smarter trade outcomes, and reducing over-dependence on a handful of markets, India can turn this moment of vulnerability into a catalyst for long-needed transformation. The cost of complacency would be borne disproportionately by rural households and agricultural communities, making timely action not only an economic imperative but a moral one.
This article is authored by Gunwant Singh, scholar, international relations and security studies, Jawaharlal Nehru University, New Delhi.
