Donald Trump reciprocal tariffs: Why India's agricultural exports are likely to be little affected

India may sustain or potentially increase its agricultural exports to the United States, despite US President Donald Trump's new reciprocal tariff implementation, according to distinguished agricultural economist Ashok Gulati.

The Trump administration's 26 per cent "discounted reciprocal tariff" on Indian products would have a restricted impact on crucial agricultural exports like seafood and rice compared to higher duties levied on regional competitors, said Gulati, who previously chaired the Commission for Agricultural Costs and Prices (CACP).

"We should not look at the tariff increase in absolute terms, but see relative tariff increases with our competitors," Gulati told PTI.

• He highlighted that whilst India faces 26 per cent tariffs, China encounters 34 per cent, providing Indian exporters an 8 per cent comparative advantage.
• Additional competitors encounter higher barriers: Vietnam at 46 per cent, Bangladesh 37 per cent, Thailand 36 per cent, and Indonesia at 32 per cent.

Regarding seafood exports, particularly shrimp, Gulati explained that India's comparative tariff advantage, coupled with shrimp's minimal share in overall US food expenditure, suggests demand should remain stable.

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Shrimp Feed Manufacturers Association of India's general secretary, Gulrej Alam, indicated that India exports approximately half of its total annual 9 lakh tonnes of shrimp to the US.

"There will be a little setback in the short term because of a lower tariff of 10 per cent imposed on Ecuador, which is also one of the major shrimp exporters to America," Alam said, noting this development concerns Indian shrimp production.

Ecuador benefits from its proximity to the US. Nevertheless, India possesses superior bulk handling capacity and packaging quality, Alam observed.

"In the short term, the trade will see re-routing. However, in the long term, trade will not be a challenge," he added.

Regarding rice exports, where current US tariffs are 9 per cent, India maintains competitiveness against Vietnam and Thailand despite the increase to 26 per cent.

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All India Rice Exporters Association's former president, Vijay Sethia, stated India exports 250,000 to 300,000 tonnes of rice yearly to the US.

"The 26 per cent tariff on all varieties of rice will definitely slow down our exports in the short term but will capture its space in the long term," Sethia said, adding that the duty increase would affect American consumers.

Gulati, currently chair professor for agriculture at the Indian Council for Research on International Economic Relations (ICRIER), indicated India could potentially secure market share in sectors vacated by competitors facing higher tariffs.