By Vikas Parashram Meshram
The proposed trade agreement between India and the United States has triggered intense debate across the country. This agreement is not merely an attempt to expand bilateral trade; it is directly linked to Indian agriculture, the rural economy, democratic processes, and global geopolitics. The concept of free trade agreements (FTAs) may appear attractive on the surface, but the political economy and social consequences behind them are often unequal and controversial. Once again, the fundamental question has surfaced: who will benefit from this agreement, and who will pay its price?
Following the release of the draft agreement, several farmers’ organizations have expressed serious concerns and are preparing for a nationwide protest starting February 12. Farmers’ apprehensions are not limited to tariff concessions on soybean oil, grains, or apples. These concerns are about trust, transparency, and the future of Indian agriculture. While the government repeatedly assures that agriculture and the dairy sector will be protected, the agreement includes provisions to reduce tariffs on various agricultural and food products and remove non-tariff barriers, which has heightened farmers’ anxiety.
Previous free trade agreements with the European Union and New Zealand led to a surge in cheap imports, adversely affecting local producers. Historically, FTAs have been important instruments for expanding global trade. Since the establishment of the World Trade Organization (WTO), reducing tariffs, opening markets, and creating a multilateral trade system has become global policy. However, the experience of many countries in the Global South shows that FTAs often benefit multinational corporations, exporters, and advanced economies, while small farmers, local industries, and informal workers suffer. Studies by FAO and UNCTAD indicate that after liberalizing agricultural markets, many developing countries witnessed rising rural income inequality and stagnant or declining incomes for small farmers.
The apple industry is a particularly notable example. In Himachal Pradesh, Jammu & Kashmir, and Uttarakhand, apples are not just a crop but the backbone of the entire mountain economy. If import tariffs on American apples are reduced and minimum import prices are increased, American apples will enter the Indian market at prices comparable to premium Indian apples. As a result, consumers may prefer imported apples of similar price but higher perceived quality, reducing the market share of local producers. Storing apples in cold storage may become unviable, and the local industry could face a severe crisis.
A similar situation exists for soybean and grains. In India, soybean production is largely undertaken by small and marginal farmers. On average, one acre of land in India produces about 1 metric ton of soybean, whereas in the United States, genetically modified soybean varieties can yield up to 3 metric tons per acre. This productivity gap creates unequal competition for Indian farmers. Moreover, American farmers receive substantial government subsidies. On average, American farmers receive around $66,000 annually in subsidies, and a special assistance program of $12 billion has been proposed for 2026. In contrast, Indian farmers receive limited support and often have to sell their produce at prices 30–40 percent below the Minimum Support Price (MSP). Under such conditions, free trade is like playing on an uneven playing field.
This agreement is not only economic but also political. Midterm elections are approaching in the United States, and agriculture is a powerful political sector there. The trade war with China significantly affected American farmers and reduced export markets. Therefore, the Trump administration needs new markets. With a population of 1.4 billion, India represents a massive market for the United States. Thus, a trade agreement with India is an important part of U.S. political strategy. Reducing rural discontent and satisfying the farm lobby is politically crucial for the Trump administration.
One of the most serious aspects of this agreement is the lack of transparency. Farmers’ organizations, opposition parties, and several state governments have demanded that the full details of the agreement be presented before Parliament. Trade agreements have consequences as significant as domestic laws, as they affect the livelihoods of millions of people. Therefore, parliamentary debate, public consultation, and impact assessments are essential. Implementing major policy decisions without democratic processes erodes public trust and increases social unrest.
Indian agriculture is already grappling with multiple crises indebtedness, climate change, rising production costs, market volatility, and policy uncertainty. According to the Organisation for Economic Co-operation and Development (OECD), Indian farmers suffered losses amounting to ₹111 lakh crore between 2000 and 2025. If cheap imported products flood the market, domestic markets could collapse. The reduction of tariffs on cotton imports previously led to falling domestic prices, causing significant losses to farmers. Economists argue that food imports reduce rural employment and increase unemployment. In India, agriculture is not just an economic sector; it is the primary source of rural employment, a pillar of social stability, and the backbone of food security. About 45 percent of India’s population depends directly or indirectly on agriculture (World Bank, 2023). Agriculture and allied sectors contribute around 18 percent to GDP in rural India, but their share in employment is much higher. Therefore, any trade agreement affecting agriculture is not just an economic decision but a social and political one.
The biggest difference between Indian and American farmers lies in subsidies and infrastructure. According to the OECD’s Producer Support Estimate (PSE) report, the United States provides substantial government support to agricultural production. The Agricultural Resource Management Survey (2020) shows that an American farmer receives an average annual subsidy of $66,314. Additionally, the U.S. government announced an extra $12 billion support under the “Farmers Bridge Assistance Program” for 2026. This support shields American farmers from market fluctuations and allows them to sell produce at lower prices. In contrast, Indian farmers face limited subsidies, inadequate irrigation facilities, weak storage infrastructure, and market instability. FAO studies indicate that the income of small farmers in India is 10 to 15 times lower than that of farmers in OECD countries. The MSP often does not translate into actual market prices, and farmers frequently receive 30–40 percent less than MSP. Under such conditions, competing with subsidized American products is extremely difficult for Indian farmers.
The agreement also raises serious concerns about genetically modified (GM) crops. American agriculture is heavily dependent on GM crops, whereas India has social, environmental, and health-related concerns regarding GM crops. If free trade facilitates the entry of GM food products, it could undermine food sovereignty. Food sovereignty means a country’s right to control its own food system. If India’s food market comes under the control of multinational corporations and foreign producers, national food security and rural autonomy will be at risk.
Globally, this agreement is being viewed as part of a new trade order. The Trump administration’s trade policy is based on pressure and power politics. Many analysts believe this approach undermines WTO rules. As countries are forced to comply under pressure, a new global order is emerging where powerful nations dictate rules. This trend is dangerous for developing countries. India must maintain strategic autonomy while engaging in free trade; otherwise, its agricultural market could become a tool in global geopolitical strategies.
Ultimately, whether the India–US trade agreement will be mutually beneficial or an unequal deal depends on its final details. With proper safeguards, subsidy reforms, infrastructure development, and market protection, free trade can become an opportunity. However, if markets are fully opened without protecting local farmers, this agreement could become a historic threat to rural India. Agriculture is not merely an economic sector; it is the foundation of social stability, democracy, and national security. Therefore, any trade agreement should be based not only on numbers but on the lives of farmers. The benefits of free trade may be visible in cities, but if villages bear the cost, the story of development will remain incomplete and unjust.
(This article was first published in Countercurrents)
