US-India farm trade is growing fast despite President Trump’s steep tariffs and deadlocked talks over GM crops, dairy, and ethanol. India’s cultural, political, and farmer protection concerns keep a broader farm trade deal out of reach.
On August 6, US President Donald Trump announced another 25% tax on goods from India, raising the total tax to a steep 50%. This is one of the highest rates India faces from any big trading partner, except Brazil. The decision came after trade talks between the two countries failed, mainly because the US wanted more access to sell its farm products in India, and both sides could not agree. The higher tax will hit India’s farm-related exports the most, especially products like seafood, spices, and packaged foods. These are industries that grew well last year and give jobs to many workers.
The US has been asking India to allow more American farm products into the country, such as GM corn ( “Genetically Modified corn “whose genes are changed in a lab to improve growth or resistance to pests), soybeans, ethanol, wheat, chicken, and dairy items. But India has strongly refused, saying it could hurt its rural economy and go against cultural beliefs.
Why Is India Saying No to US Farm Demands?
India is against some US farm products because of worries about health, tradition, and politics. According to Reuters, most corn and soybeans grown in the US are genetically modified, and India does not allow such crops for people to eat. The report also says that even though India has created its own genetically modified mustard, it has not been approved for farming because there are still court cases against it.
(This means the mustard exists, but farmers are not allowed to grow it until the legal issues are solved.)
The legal issues are mainly cases filed by environmental and farmer groups in court. They argue that genetically modified crops could harm health, reduce crop variety, and hurt the environment. Because these cases are still being heard, the government has not allowed GM mustard to be grown yet. India also strongly opposes buying dairy products from the US because most people here follow a vegetarian diet. A big worry is that cows in the US are often given feed made from animal parts, which goes against Indian cultural and religious values.
India is also not keen on importing ethanol from the US for fuel. Ethanol is a type of alcohol made from plants like sugarcane and corn, and it can be mixed with petrol to make fuel cleaner and cheaper. In India, ethanol is made mainly from sugarcane and corn. In the US, it is mostly made from corn, where the corn is ground, mixed with water, fermented using yeast, and then distilled to separate the ethanol.
India prefers using locally made ethanol to reduce fuel imports and support Indian farmers. If India allows US ethanol for fuel, it could lower the price of corn grown in India. This would hurt farmers in states like Bihar, where many people depend on corn farming. With elections coming up there, officials told Reuters that such a move could cause strong public anger.
Why Are Farm Imports a Political Risk?
Agriculture makes up only about 16% of India’s $3.9 trillion (around ₹339 lakh crore) economy, but it is still the main source of income for nearly half (50%) the people in the country. Food prices play a big role in how people vote, and basic food items make up almost half of the prices tracked in India’s consumer price index.
India had a tough experience when it opened its market for edible oils in the 1990s. Once imports were allowed, India started buying most of its cooking oil—especially palm oil—from countries like Indonesia and Malaysia. This made the country dependent on other nations for an essential kitchen item, which also meant global price changes could directly affect Indian households.
Today, india buys about two-thirds (around 66%) of the vegetable oil it needs from other countries, according to Reuters. Officials worry the same thing could happen with other important foods like grains, pulses, and dairy if they are opened up to foreign competition.
Vegetable oil is a general term for oils made from plants, like sunflower, soybean, mustard, or palm. Palm oil is one type of vegetable oil, made from the fruit of palm trees. It’s cheap and widely used but is often linked to health and environmental concerns.
If a lot of cheaper American farm products enter India suddenly, local prices could drop sharply. This would hurt small farmers who depend on selling their crops at fair prices. It could also cause public anger and protests—similar to the big farmers’ protest in 2020–21, when the government had to cancel three new farm laws after months of demonstrations.
Another worry is that if India signs a trade deal with the US, it might have to give the same benefits to many other countries too. This is because of a WTO rule called the “most-favoured nation” rule, which says you can’t give special trade benefits to one country without offering them to all WTO members. This could open the door for more foreign farm products, putting extra pressure on Indian farmers.
Modi Stands Firm on Farm Issues: ‘Willing to Pay the Price’
After Trump raised taxes on Indian goods, Prime Minister Narendra Modi said on Thursday,7th August, that India will not give up protecting its rural communities, even if there is pressure from other countries.
Modi said, “India will never give up on protecting its farmers, cattle rearers, and fishermen. I know this stand may cost me a lot, but I am ready for it.” These comments, aimed at the US, show that India is firm on not opening up sensitive farm sectors in trade talks.
But Isn’t Farm Trade Between the US and India Increasing?
As reported by CNN News 18, this is the surprising part — even though trade talks on agriculture are stuck, farm trade between the two countries is growing quickly. According to US Department of Agriculture data reported by The Indian Express, India’s farm imports from the US went up by 49.1% in the first half of 2025, rising from $1.13 billion (about ₹9,831 crore) in Jan–June 2024 to $1.69 billion (about ₹14,703 crore) in the same period this year.
If the current trend continues, US farm exports to India could go over $3.5 billion (about ₹30,450 crore) this year.
India’s farm exports to the US are also growing fast, rising by 24.1% in the same period — from $2.79 billion (about ₹24,273 crore) to $3.47 billion (about ₹30,189 crore). If this pace continues, India’s farm exports to the US could cross $7.7 billion (about ₹67,026 crore) by the end of the year.
But this growth is not the same on both sides. India sells a wider variety of farm products to the US, mainly high-value items like seafood (especially frozen shrimp), spices, rice, packaged foods, and essential oils.
The US sells fewer types of farm products to India, mainly tree nuts like almonds and pistachios, along with ethanol, cotton, and soybean oil. Ethanol and soybean oil come from genetically modified corn and soybeans, but in India, they can only be used for industrial purposes — not for mixing with fuel or for people to eat.
Genetically modified (GM) soybeans and ethanol are used in industries in different ways:
GM Soybeans – These are often processed to make soybean oil, which can be used in making soaps, cosmetics, paints, lubricants, and biodiesel. The leftover soybean meal is used for animal feed.
Ethanol – This alcohol is used to make industrial products like sanitizers, cleaning solutions, perfumes, paints, and certain chemicals. It can also be used to make bio-based plastics and other materials.
In India, such uses are allowed because they don’t involve people directly eating or drinking the product.
Why Is the Seafood Trade at Risk?
As reported by CNN News 18, India’s biggest farm export to the US is seafood, mainly shrimp. In 2024, these exports were worth $2.48 billion (about ₹21,576 crore), making the US India’s second-largest seafood buyer after Canada, according to The Indian Express.
With Trump’s new 50% tax, India will be at a disadvantage compared to other countries selling seafood to the US — Chile pays only 10%, Ecuador 15%, Vietnam 20%, and Canada 35%. The 32.5% growth in India’s seafood exports seen in Jan–June 2025 may not continue if this tax gap becomes bigger.
According to Reuters, Indian officials worry that these higher taxes could wipe out recent growth in products like packaged foods, spices, and rice — areas where most of the supply comes from small and medium-sized businesses.
What Does the Data Show?
According to The Indian Express, in 2024, India sold $6.21 billion (about ₹54,027 crore) worth of farm products to the US, while it bought $2.38 billion (about ₹20,706 crore) worth from the US.
The gap between what India sells to the US and what it buys is large and still growing. But that doesn’t mean India has full control. The US can still use its power to raise taxes and may even put pressure on other sectors if trade talks stay stuck.
Soybean oil sales from the US to India have jumped in 2025 after India cut the import tax on it from 27.5% to 16.5% on May 31. However, this was mainly done to control rising prices in India, not to show a permanent change in trade policy.
Conclusion: Trade Is Growing, But Politics Gets in the Way
It’s an ironic situation — US-India farm trade is set to reach record levels, yet agriculture is the main reason a bigger trade deal is stuck. The problem is not just about trade but also about politics at home, cultural beliefs, and a deep mistrust of foreign control over food policy.
Trump’s higher tariffs might make India agree to small changes, but on the main issues, the deadlock will likely continue unless one side changes its firm stand. Until then, trade tensions may grow, with Indian exporters facing uncertainty and the US missing out on better access to one of the world’s fastest-growing food markets.
(Girish Linganna is an award-winning science communicator and a Defence, Aerospace & Geopolitical Analyst. He is the Managing Director of ADD Engineering Components India Pvt. Ltd., a subsidiary of ADD Engineering GmbH, Germany. Contact: [email protected] )