Guest Author: Dhruv Saxena, Senior Consultant, Agri-Food & Nutrition Growth Advisory, Frost & Sullivan
11 April 2025, New Delhi: President Donald Trump’s recent imposition of a 26% “discounted reciprocal tariff” on Indian imports has made India’s export to USA volatile. The impact of these tariffs is going to differ by individual industries; while certain industries may face challenges, others could potentially find opportunities due to the relative nature of these tariffs compared to those imposed on competing nations.
Recent Update
US has decided to introduce a 90-day moratorium on reciprocal tariffs for most countries barring China. In all likelihood, India would come to an agreement on trade deal with the USA during this period, agreeing to reduce its import duties for providing market access to the USA thus avoiding the brunt of reciprocal tariffs. However, there still might be a possibility that US might re-introduce these taxes in near future should trade talks be not to their liking.
What does it mean for Indian Agriculture and Food Exports
- Seafood Industry: The U.S. is a significant market for Indian seafood, especially shrimp, which constitutes approximately 40% of India’s seafood exports to the U.S. Despite the new 26% tariff, India’s seafood sector might maintain its competitiveness. This is because competing countries like Vietnam and China are subjected to even higher U.S. tariffs—46% and 34%, respectively—providing Indian exporters with a relative advantage and it might even boost India’s seafood exports to the U.S.
- Rice Exports: India exports between 250,000 to 300,000 tonnes of rice annually to the U.S. With the imposition of the 26% tariff, concerns arise regarding the competitiveness of Indian rice in the U.S. market. However, since other major rice exporters like Vietnam and Thailand are facing similar or higher tariff rates, India’s position may not be significantly disadvantaged. Maintaining quality and exploring cost efficiencies will be crucial for Indian rice exporters to retain their market share.
- Spices: U.S. is a significant market for Indian spice exports and will come under pressure with imposition of reciprocal tariffs. Some of the Indian spices exports have an alternate competitor which has been targeted with a lower tariff – Brazil at 10% for black peppers; Guatemala at 10% for Cardamom; Egypt at 10% for Cumin. While other spices like Turmeric and Chilli have competitors hit with higher tariff than India.
- Dairy: India has significant Dairy exports to USA – US$ 181 million – which would come under pressure with increased tariffs. However, bulk of these exports are for products like clarified butter and cottage cheese for which India faces no significant challenger. On the contrary, US exports significant amount of dairy to countries like South Korea, Japan, and in Southeast Asia and any counter tariff imposed by these countries on USA would provide export opportunities to Indian Dairy players to these countries.
- Processed Food, Sugar, and Cocoa: Exports in these categories, valued at approximately $1.03 billion, and a 26% tariff would render Indian processed foods, sugar, and cocoa products less competitive in the U.S. market, potentially leading to a decline in export volumes.
- Agrochemicals: India exported ~ $300 million worth of agrochemicals to the U.S. which would now be under significant challenge. While China has been imposed with tariffs higher than India, competitors like Mexico and EU fall in similar tariff range as India and enjoy geographic closeness to the market. An offshoot of China being imposed with higher tariffs could be dumping of agrochemical by China in other markets which could distort market prices in short term.
Overall Implications:
| Product | Earlier Tariffs | New Tariffs |
| Rice | 0% – 1% | 26% |
| Spices | 0% – 5% | 26% |
| Dairy | 0% – 10% | 26% |
| Processed Foods | ~5% | 26% |
| Seafood | 0% | 26% |
| Agrochemicals | 2% | 26% |
While the 26% reciprocal tariff presents challenges, the relative tariff advantages over competitors subjected to higher rates may help certain Indian agricultural exports maintain their foothold in the U.S. market. Nonetheless, sectors like processed foods, sugar, cocoa, and spices may need to strategize to mitigate the adverse effects of these tariffs. Diversifying export destinations, enhancing product quality, and engaging in diplomatic negotiations could be pivotal in navigating this altered trade landscape.
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