How the India–US trade deal will deepen the farm crisis tomorrow

What many feared has come to pass. This writer has been warning for some time now that no matter what the Modi government claimed, Donald Trump would succeed in forcing India into a trade deal. Whatever the spin, agriculture would be part of it.

For months, courtier media kept insisting that Modi had refused to bow to American pressure. In August 2025, the prime minister thumped his chest and declared that farmers, livestock rearers and fisherfolk were his top priority, and that there would be no compromise on their interests. The same claim was made when agriculture was kept out of the trade agreement with the European Union — proof, we were told, that Modi was protecting farmers.

In the end, what was bound to happen did happen. As with the India–Pakistan ceasefire, this time too Indians heard the news first from the US President. The prime minister has yet to open his mouth, and the Indian government has not issued a formal statement. But Trump’s announcement clearly states that agriculture has been included in the deal.

This has been confirmed by US agriculture secretary Brooke Rollins, who congratulated American farmers and wrote that President Trump had now thrown open the doors of Indian markets to their crops.

The Indian government will no doubt do a damage-control exercise. But before we get swept up in the mainstream media narrative, let’s review a few basic facts. For decades — regardless of which party was in power — India’s policy has been to keep agriculture out of international trade agreements, to protect farmers’ interests.

Indian farmers are not threatened by foreign trade because they are inefficient or incompetent. All major agricultural producer countries heavily subsidise their farmers, allowing them to sell cheaply in global markets. In contrast, the Indian government extracts more from farmers’ pockets than it gives them.

In technical terms, Indian farmers receive what amounts to a ‘negative subsidy’. That is why the government imposes import duties on crops produced in sufficient quantities at home — to shield farmers from foreign dumping. This policy explains why agriculture was excluded from all major trade agreements in recent years. The proposed agreement with the European Union did allow processed foods, which could eventually affect Indian farmers — but raw agriculture remained protected.

Trump has now forced India to abandon this position. From the outset, American negotiators had their eyes on India’s agricultural markets. The US is among the world’s largest producers of maize, soybean and cotton. Production has risen sharply in recent years, but China has cut back its purchases of maize and soybean.

Last year, a US commerce department report identified India as a market that could absorb this surplus. The obstacles were India’s high import duties and the fact that most American maize and soybean are genetically modified, which is banned in India. The US also wants to export milk and dairy products to India, but here too it runs into duties and India’s condition that milk must come from cattle not fed animal feed. Washington wanted freedom from all these restrictions.

The details of the agreement are not yet public, so it is hard to say which of these conditions the Indian government has accepted. But one thing is certain: the Modi government has retreated from its long-held commitment to keep agriculture out of trade deals. It is also certain that imports of crops such as almonds and apples will rise sharply, hitting farmers who grow them. Broadly speaking, the first blow will land on maize, soyabean and sugarcane farmers.

The production of maize and soybean has risen in recent years, and farmers have received better prices. Cheap American imports will push prices down in the Indian market. Cotton may be less affected, since domestic production has declined and India already imports cotton. But this will indirectly hit sugarcane farmers.

To bypass the ban on GM crops, it’s possible the government will allow imported maize and soyabean to be used for oil extraction and ethanol production. India has abundant sugarcane and mills buy cane to produce ethanol. If ethanol starts coming in from the US, both sugar mills and sugarcane farmers will be hit. The fate of Indian dairy remains unclear for now, but if duties and restrictions are lifted, India’s livestock rearers will face a massive shock.

Commerce minister Piyush Goyal’s statement in Parliament only adds to the fog. He claims the agreement safeguards the interests of farmers and the dairy sector, while also saying that discussions are still ongoing on the provisions of the deal.

The obvious question is: if the agreement isn’t final, what’s the basis of the minister’s reassurance that the farmers’ interests are safe? Or, if indeed their interests have been protected, why not make the terms public? In any case, why hasn’t the Indian government contradicted the statements of the US president and agriculture secretary?

The full picture emerges when this external shock is seen in conjunction with the internal indifference. There was not even a mention of farmers in the latest Union Budget. Even token schemes announced in earlier years have been dropped. Spending on agriculture and allied sectors has been falling steadily since 2019; this year it has been cut from 3.38 per cent to 3.04 per cent.

Not just that — six special missions announced last year received not a single rupee in this Budget. On top of this, preparations are under way to cut urea subsidies. Yet there is no plan to address the long-term crisis in agriculture.

The government has decided to abandon farmers to their fate. The question now is how farmers and their organisations respond to the challenge.

Views are personal. More of Yogendra Yadav’s writing can be read here