New Delhi, April 3 — India may not only sustain but potentially grow its agricultural exports to the United States despite the newly imposed 26% tariff, according to noted agricultural economist Ashok Gulati. The key reason, he emphasized, lies in India’s relative advantage over regional competitors who face even steeper trade barriers.
“We should not look at the tariff increase in absolute terms, but see relative tariff increases with our competitors,” Gulati said.
According to him, while India faces a 26% tariff, China will be subject to a 34% duty—creating an 8% relative advantage for Indian exporters. Other major agricultural exporters in the region face even steeper hikes: Vietnam at 46%, Bangladesh at 37%, Thailand at 36%, and Indonesia at 32%.
In the case of shrimp, he pointed out that the product constitutes a small fraction of US food spending, making demand relatively inelastic. “India’s relative tariff advantage combined with shrimp's minor share in US food expenditure means demand is unlikely to shrink significantly,” he explained.
For rice, the situation remains favorable despite the tariff bump. US tariffs on rice currently range between 9% and 11%, but India still maintains a cost advantage over Vietnam and Thailand, even with the increase to 26%.
As global trade dynamics shift with these tariff realignments, India’s agricultural sector may find a silver lining amid protectionist policies—emerging stronger in key export categories.
Tariffs Announced by US Could Favor India Over Rivals
The development follows the US administration's announcement of reciprocal tariffs on several countries, with India subject to a 26% "discounted reciprocal tariff." However, Gulati, who previously chaired the Commission for Agricultural Costs and Prices (CACP), believes the increase may work in India's favor when viewed in context.“We should not look at the tariff increase in absolute terms, but see relative tariff increases with our competitors,” Gulati said.
According to him, while India faces a 26% tariff, China will be subject to a 34% duty—creating an 8% relative advantage for Indian exporters. Other major agricultural exporters in the region face even steeper hikes: Vietnam at 46%, Bangladesh at 37%, Thailand at 36%, and Indonesia at 32%.
Seafood and Rice Likely to Withstand Impact
Gulati, currently chair professor for agriculture at the Indian Council for Research on International Economic Relations (ICRIER), noted that India’s key exports like seafood—especially shrimp—and rice are well-positioned to weather the tariff hike.In the case of shrimp, he pointed out that the product constitutes a small fraction of US food spending, making demand relatively inelastic. “India’s relative tariff advantage combined with shrimp's minor share in US food expenditure means demand is unlikely to shrink significantly,” he explained.
For rice, the situation remains favorable despite the tariff bump. US tariffs on rice currently range between 9% and 11%, but India still maintains a cost advantage over Vietnam and Thailand, even with the increase to 26%.
Opportunity to Expand Market Share
Gulati suggested that the tariff-induced disadvantages faced by India’s competitors could open new market opportunities. "India could potentially gain market share in spaces vacated by higher-taxed competitors," he said.As global trade dynamics shift with these tariff realignments, India’s agricultural sector may find a silver lining amid protectionist policies—emerging stronger in key export categories.