How farm exports have grown despite US tariffs

Why in the News?

India’s agricultural exports recorded growth in 2025-26 despite higher tariff barriers imposed by the United States. This assumes importance because farm exports grew even when tariffs were raised sharply from 10% to 25% and then to 50% within months.

How has India’s agricultural trade performed amid U.S. tariff pressures?

1. Export Growth: Agricultural exports increased by 2.3% year-on-year, reaching $53.13 billion in 2025-26, marginally below the all-time high of $53.2 billion in 2022-23.
2. Trade Resilience: Overall exports rose 0.9% to $441.7 billion, despite aggressive tariff increases by the U.S. administration.
3. Tariff Escalation: The U.S. increased tariffs from 10% (February 10) to 25% (August 7) and later 50% (August 27), creating major trade uncertainty.
4. Comparative Contrast: Contrary to expectations of export contraction under higher tariffs, India sustained agricultural export growth through diversification.
5. Trade Balance: Agricultural trade surplus narrowed over time, despite remaining positive, due to increasing imports.

Why were Indian agricultural exports able to withstand U.S. tariff shocks?

1. Market Diversification: Exporters reduced excessive dependence on the U.S. market and expanded into Vietnam, UAE, Japan, Belgium, Saudi Arabia, Egypt and Bangladesh.
2. Commodity Diversification: Growth shifted toward high-performing sectors such as marine products, buffalo meat, coffee and basmati rice, reducing concentration risks.
3. Demand Expansion: Alternative markets compensated for reduced U.S. demand through higher shipments.
4. Competitive Pricing: India retained export competitiveness in labour-intensive and agro-processing sectors.
5. Supply Flexibility: Exporters redirected shipments geographically instead of relying on one dominant market.

How did marine products perform?

1. Marine Exports: Marine exports grew 13.9%, crossing $8.4 billion, becoming the top-performing agricultural export.
2. Alternative Markets: Exports expanded to China ($1.2 billion), Vietnam ($881.8 million), Japan ($408.5 million) and Belgium ($225.3 million).
3. Frozen Shrimp Diversification: Exporters offset reduced U.S. demand through shipments to alternative destinations.

Why did buffalo meat exports rise significantly?

1. Export Surge: Buffalo meat exports increased 25.6%, touching a record $5.1 billion, surpassing the previous peak of $4.8 billion (2014-15).
2. Major Markets: Key destinations included Vietnam ($740.8 million), Egypt ($656.1 million), UAE ($300.4 million) and Saudi Arabia ($317.6 million).
3. Volume Growth: Exports rose from 1.2 lakh tonnes (2024-25) to 14.2 lakh tonnes (2025-26).

How has India emerged as a stronger coffee exporter?

1. Coffee Boom: Coffee exports crossed the $2 billion mark for the first time in 2025-26.
2. Structural Driver: High global coffee prices and supply disruptions in major producers such as Brazil and Vietnam increased India’s competitiveness.
3. Export Destinations: Major buyers included Italy, Germany, Russia, UAE and Belgium.

What explains growth in basmati rice and processed foods?

1. Basmati Exports: Basmati rice exports increased from $337.1 million to $285.9 million (decline in U.S. market but overall diversification sustained demand).
2. Processed Foods: Processed fruits and vegetables exports expanded due to rising international demand.
3. Fresh Produce: Exports of grapes, pomegranates, mangoes, bananas, onions and vegetables reached record levels.

Why do edible oil imports remain structurally high?

1. Import Dependence: Vegetable oil imports reached a record $19.56 billion, despite declining volumes.
2. Domestic Deficit: India imports nearly 40% of edible oil consumption, exposing vulnerability in oilseed production.
3. Top Imports: Major imports included palm oil, soybean oil and sunflower oil.

Why has cotton turned from an export to an import commodity?

1. Import Surge: Cotton imports rose due to domestic shortages and absence of new yield-enhancing technologies.
2. Structural Weakness: Bt cotton productivity gains stagnated, affecting competitiveness.
3. Export Decline: Cotton shifted from a traditional export commodity toward higher import dependence.

What trends are visible in fruit and pulse imports?

1. Fresh Fruits: Imports rose to $3.5 billion, including apples, kiwis, grapes, pears and dates.
2. Pulses: Imports increased because of domestic supply shortfalls and consumption demand.
3. Nutritional Demand: Rising incomes contributed to diversified food demand.

Does India’s agricultural trade surplus remain sustainable?

India’s agricultural trade surplus faces critical sustainability risks despite remaining positive at $12.7 billion in 2025-26.

1. Trade Surplus: India continues to remain a net agricultural exporter.
2. Aggressive Structural Erosion: Agricultural trade surplus declined from $27.7 billion (2013-14) to $12.7 billion (2025-26).
3. Import Growth: Faster growth in edible oil, cotton and fruit imports reduced net gains.
   1. The Forex Drain: High-volume imports of edible oils ($19.5B) and pulses ($3.6B) create an structural annual drag of $23.1 billion.
4. Weak Import Substitution: Domestic policy interventions have failed to scale local oilseed and pulse production to displace international imports.

What are the broader economic and policy implications?

1. Export Diversification: Reduces overdependence on single-country markets and strengthens trade resilience.
2. Food Processing: Expands value-added exports and rural employment.
3. MSP and Competitiveness: Balances domestic food security with export competitiveness.
4. Oilseed Mission: Necessitates domestic edible oil production reforms.
5. Technology Adoption: Requires improved cotton productivity and climate-resilient farming.
6. Trade Diplomacy: Strengthens India’s negotiating position amid rising global protectionism.

Conclusion

India’s farm export resilience despite U.S. tariff escalation demonstrates the benefits of market diversification and commodity specialization. However, rising dependence on edible oils, cotton and select food imports highlights structural weaknesses in domestic agricultural productivity. A balanced strategy combining export competitiveness with import substitution and technological modernization remains essential for sustaining India’s agricultural trade surplus.

PYQ Relevance

[UPSC 2018] How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India?

Linkage: This article directly relates to global protectionism and tariff barriers, as India’s agricultural exports faced higher U.S. tariffs but remained resilient through diversification. It helps in understanding how trade shocks, export diversification and global market shifts affect India’s macroeconomic and agricultural stability.