What the India-US Trade Deal Could Bring for Agriculture

Guest Author: Pravesh Sharma, Chairman, Steering Committee, National Association for Farmer Producer Organisations (NAFPO). He is Former MD, SFAC & Ex-Agriculture Secretary, Madhya Pradesh.

03 March 2026, New Delhi: A vigorous debate is raging in the country around the implications of the trade deal framework being finalised between India and the United States of America. While details are yet to be finally negotiated and signed, the broad contours of the framework agreement are in the public domain and have been the subject of much commentary and analysis. In this blog, we are looking at some aspects of the trade deal in respect of their likely impact and outcomes on India’s agriculture.

As we attempt to anticipate its possible impact, we must again stress that we do not have any document or finalised text of the framework agreement, which reveals the exact nature of the provisions for agriculture. We are largely basing our understanding on media reports and commentary. These, understandably, are influenced by political positions or organizational and institutional preferences. We will try to sidestep these biases and  sketch the most likely scenarios, with the proviso that these assumptions may need to be revisited once the final agreement is available.

Like any set of policy choices, the outcomes of the India-US trade deal are unlikely to be all positive or negative. We must take for granted that our negotiators and political decision makers have fought for the best options for India. The role of policy recipients (i.e. State Governments, agribusiness companies, farmers and farmer organisations, traders, retailers and other stakeholders) is now to adapt to the changed scenario. This article is a small effort to help actors in the agriculture ecosystem develop a better understanding of the implications of the India-US trade deal and prepare for its outcomes.

Let’s look at the best case scenario first. The following possible outcomes could be triggered by this agreement:

1. While grains (except for sorghum-jowar) have been kept out of the ambit of the agreement, it’s fair to expect that the import of corn residues  (DDGS) for cattle feed and soybean oil will lower the demand for maize and soybean crops in domestic markets. This could accelerate diversification into more non-crop sectors (horticulture, dairy, fisheries, livestock, poultry- the so-called ‘high value agriculture’ segment) by impacted farmers. In the medium term this may be a positive development, as demand in the HVA value chains is growing faster than cereals and oilseeds. However, there may be a painful period of transition for such farmers, unless policy instruments in the form of extension services, technology packages, financing, access to infrastructure and new marketing arrangements are rapidly deployed.

• A related outcome is the possible higher export of HVA commodities, especially horticulture produce (fruits and vegetables; spices) due to higher production. Here again, farmers transiting to HVA must be assisted with quality control training in pre-and post-harvest management, besides near-farm infrastructure such as pack houses, cold storage etc.

• A third possible outcome, though this one may be played out over a longer term period, is that the trade deal may lead to demands and pressure for internal reforms to enable stakeholders in the sector to meet the challenge of imports. Key areas likely to be the focus of reforms are agriculture marketing (especially for major staples like cereals, oilseeds and pulses), contract farming, stocking and movement restrictions

• Another positive outcome could be the emergence of favourable conditions to foster a science-based, transparently implemented and forward-looking regime to regulate GMO-based seeds and biotechnology in general. There are already voices suggesting that the import of DDGS and soybean oil from GM-origin crops should be balanced by allowing Indian farmers access to these technologies, with suitable safeguards and by strengthening the capacity of the system to handle related regulatory, technical and management issues. These voices are likely to grow louder as the inflow of imports starts and their real impact on domestic supply chains plays out.

Of course, there are likely to be some obvious downsides of the deal as well. Despite the lack of details, we can imagine a few possible outcomes as below:

1. In the short term, the crop husbandry sector (which produces staples like cereals, pulses and oilseeds) is likely to see reduced acreage for commodities such as maize and soybean. This may initially be due to the uncertainty caused by imports of Distillers Dried Grains with Solubles (DDGS) and soybean oil and the situation could stabilise in a year or two. What we don’t want to see is reduction in the acreage under food crops, especially wheat and paddy, which form the bedrock of the national food security system. How the import profile develops will need careful watching.

• If dairy and poultry are added to the US wish list in the coming months / years, then diversification to HVA is likely to be adversely affected. A similar situation would prevail in case import of pulses is allowed under the deal. While India already imports large volumes of pulses from various countries, it is a considered policy choice and with carefully calibrated and controlled timing. It also aspires to achieve self-sufficiency in through targeted interventions. Regular imports under a trade deal (even with quotas) would definitely impact this objective adversely.

• Among the social consequences of significant agricultural imports could be an acceleration in recent trends of rural youth turning away from agriculture, which  already offers poor returns in many parts of the country. Increased youth and adult migration to urban areas in search of alternative livelihoods could also result in a rise in rural indebtedness, as costs of upskilling and relocation add up.

• Finally, both Central and State governments  may be compelled by democratic pressures to increase subsidies and/or direct financial support to compensate farm groups which lose out due to increased imports (soybean; cotton; maize). This could add to fiscal pressures and crowd out more productive capital investments.

In the absence of the final text, it would be premature to draw definitive conclusions about the India–US trade framework. Yet, even from the broad contours available, one thing is clear: Indian agriculture stands at a moment of adjustment. The deal may open new pathways for high-value exports, technological modernisation and policy reform, but it could also expose vulnerabilities in staple crop systems and rural livelihoods. The real outcome will depend not only on the negotiated terms, but on how swiftly and intelligently governments, markets and farmers respond. Preparedness, institutional agility and evidence-based policymaking will ultimately determine whether this agreement becomes a catalyst for transformation or a source of prolonged stress for the farm sector.

About NAFPO

National Association for Farmer Producer Organisations (NAFPO) is a non-profit, multi-stakeholder national platform dedicated to building resilient Farmer Producer Organisations for farmer prosperity. NAFPO strengthens the FPO ecosystem through digital tools, capacity building, policy engagement, and market linkages. NAFPO envisions strong farmer-led institutions that enable smallholder Farmers to access finance, technology, markets, and governance systems—driving inclusive and sustainable agricultural transformation. 

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