What Happened
- Farm union leaders met with political leaders to discuss launching a movement against the India-US interim trade deal announced in early February 2026
- Unions expressed deep concern that tariff reductions on US agricultural imports — including dried distillers' grains (DDGs), red sorghum, soybean oil, tree nuts, and processed fruits — could depress domestic crop prices
- The deal framework requires India to eliminate or reduce tariffs on all US industrial goods and a wide range of agricultural products
- The government has maintained that sensitive products (GM products, meat, poultry, dairy, soybean, maize, rice, wheat, sugar, millets) have been excluded from concessions
- Domestic corn and soybean prices reportedly fell after the deal announcement, heightening farmer anxiety
Static Topic Bridges
India-US Interim Trade Deal (February 2026) — Key Terms
The United States and India announced a framework for an Interim Agreement on trade on February 6, 2026, during a bilateral summit. Under the deal, the US agreed to lower its reciprocal tariff on India from 25% to 18%. In return, India committed to eliminating or reducing tariffs on all US industrial goods and a range of agricultural products. India also intends to purchase $500 billion worth of US energy products, aircraft, precious metals, technology products, and coking coal over five years.
- US reciprocal tariff on India: reduced from 25% to 18%
- India's agricultural concessions: DDGs, red sorghum (animal feed), tree nuts, fresh and processed fruit, soybean oil, wine and spirits
- Protected/excluded items: GM products, meat, poultry, dairy, soybean (whole), maize, rice, wheat, sugar, millets, certain fruits
- India also agreed to address non-tariff barriers on US medical devices, ICT goods, and food products
- The US White House revised its initial fact sheet after Indian diplomatic engagement to clarify the scope of agricultural concessions
Connection to this news: Farm unions are specifically contesting the inclusion of DDGs, soybean oil, and red sorghum in the concession list, arguing these products compete directly with domestically grown maize, soybean, and jowar used for animal feed.
WTO Agreement on Agriculture (AoA) and India's Tariff Policy
The WTO Agreement on Agriculture (1995) governs international agricultural trade through three pillars: Market Access (tariff reduction), Domestic Support (subsidy disciplines), and Export Competition (export subsidy elimination). India, as a developing country, enjoys Special and Differential Treatment, including longer implementation periods and higher bound tariff rates. India's bound tariffs on agricultural products are significantly higher than applied tariffs — for example, the bound rate on many agricultural products is 100-150%, while applied rates are typically 30-50%.
- India's average applied tariff on agricultural products: approximately 36% (WTO data)
- Bound tariffs are often 3-4 times the applied rates, giving India policy space for bilateral deals
- Special Safeguard Mechanism (SSM) and Special Products provisions protect developing countries against import surges
- India has historically used tariff rate quotas (TRQs) and import licensing to regulate agricultural imports
- The Peace Clause (Bali Decision, 2013) protects India's food stockholding programmes from WTO challenges
Connection to this news: The tariff reductions in the India-US deal operate within India's WTO-compliant policy space (applied rates being lowered, not bound rates), but farm unions argue that even reductions in applied tariffs on feed-related commodities could undermine domestic price support systems.
Agricultural Price Support — MSP and Market Impact
India's agricultural price support system centres on the Minimum Support Price (MSP), announced by the government based on recommendations of the Commission for Agricultural Costs and Prices (CACP). The government has committed to setting MSP at least 1.5 times the cost of production (A2+FL formula). However, MSP is effective only when backed by government procurement, which is significant primarily for rice and wheat. For crops like maize, soybean, and jowar, procurement is minimal, making their prices highly sensitive to import competition.
- MSP is declared for 22 mandated crops plus sugarcane (FRP)
- CACP recommends MSP based on three cost concepts: A2 (paid-out costs), A2+FL (including family labour), and C2 (including imputed rent and interest on capital)
- Government procurement is robust for rice and wheat but negligible for maize, soybean, and coarse cereals
- Soybean MSP for Kharif 2025: Rs 4,892/quintal; Maize MSP: Rs 2,225/quintal
- Price Deficiency Payment schemes (like Madhya Pradesh's Bhavantar Bhugtan Yojana) have been tried as alternatives to procurement
Connection to this news: Farm unions fear that cheaper US imports of DDGs and soybean oil will depress market prices of domestically grown soybean and maize below MSP levels, and since government procurement of these crops is minimal, farmers would bear the full impact of price declines.
Key Facts & Data
- US reciprocal tariff on India reduced from 25% to 18% under the interim deal
- India's agricultural concessions include DDGs, red sorghum, soybean oil, tree nuts, fruits, wine and spirits
- Protected products: GM products, meat, poultry, dairy, whole soybean, maize, rice, wheat, sugar, millets
- India committed to $500 billion in US purchases (energy, aircraft, metals, technology, coking coal) over 5 years
- India's average applied agricultural tariff: approximately 36%
- MSP coverage: 22 mandated crops + sugarcane (FRP); robust procurement only for rice and wheat
- Soybean MSP (Kharif 2025): Rs 4,892/quintal