"Economist issues warning: Keep agricultural tariffs with the US open or face potential $50 billion export losses for India"
In the ongoing India-US trade negotiations, agricultural economist Ashok Gulati has emphasized the importance of a balanced approach. Gulati, a prominent figure in India's agricultural policy circles, has suggested calibrated measures such as tariff-rate quotas for corn imports as a potential solution.
Gulati warns that India risks losing $50 billion worth of exports if it refuses to engage on agriculture in trade negotiations with the United States. He points out that agriculture and dairy have emerged as the biggest sticking points in the proposed deal.
India, Gulati notes, heavily relies on imports, with almost 55 to 60 percent of edible oil being imported. This dependence, he argues, justifies the need for strategic imports, such as allowing up to two million tons of corn when production is around 42 million tons.
The economist urges negotiators to strike a balance, suggesting that India should stop importing edible oils worth $17 billion. He argues that this move could be offset by India's competitive agricultural sectors, as up to 80 percent of India's agriculture is very competitive.
Gulati also proposes reducing India's high agricultural tariffs selectively to gain better market access in the US, while protecting vulnerable domestic sectors. This approach, he suggests, could involve a combination of tariff cuts with safeguards to support farmers during the negotiations.
A contentious issue in the negotiations has been India's high tariffs on farm goods, such as corn, soybean, and skimmed milk powder. Gulati argues that these tariffs are overdue for reform. However, he also warns of potential retaliation if India remains inflexible, citing the risk of a 50 percent tariff on shrimp exports to the U.S., which could collapse overnight.
The potential political fallout of tariffs on shrimp exports could occur in Andhra Pradesh, a state that contributes significantly to India's shrimp exports. Gulati, however, argues that the hypocrisy of importing edible oils should not be a part of the negotiation in trade discussions.
Currently, India imports $37 billion worth of farm products, with $2 billion coming from the U.S., and exports about $5.9 billion. Washington is pressing New Delhi to lower tariffs on farm goods. However, Gulati maintains that trade negotiations are about give and take.
India has so far held firm, citing the need to protect its farmers and rural economy. Gulati's proposals aim to find a middle ground that ensures India's agricultural interests are protected while also opening up opportunities for increased trade with the US.
