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India faces growing global pressure to liberalise its agricultural markets amidst trade negotiations, FTAs, and WTO commitments. At the same time, ensuring food security and protecting rural livelihoods remains a domestic priority.

Benefits of Global Trade Integration

• Export Revenue Growth: Enhanced access to global markets has increased agri-exports.E.g., India’s agricultural exports to the US were worth $8.4 billion.
• Technology & Investment Inflow: FTAs can attract agri-tech innovations and cold-chain infrastructure.E.g., partnerships with developed nations enable modernisation of storage and logistics.
• Market Efficiency: Global competition improves price discovery and benefits quality producers.
• Geopolitical Leverage: Trade agreements strengthen India’s role in forums like the WTO and BRICS.
• Input Security via Diversified Imports: Import of essentials like palm oil and fertilisers protects supply chains. E.g., Indonesia’s 2022 palm oil export ban highlighted India’s vulnerability.

Importance of Domestic Food Security

• Rural Livelihoods: Agriculture employs ~42% of the workforce, primarily small and marginal farmers.Over 100 million dairy farmers depend on protective tariffs.
• Nutrition and Price Stability: Domestic self-sufficiency guards against global price shocks.
• Reduced Import Dependence: A strong domestic base cushions India during crises.E.g., Ukraine war caused a spike in fertiliser prices, exposing dependency.
• Political and Strategic Stability: Ensures rural harmony and policy autonomy.

Challenges of Trade Liberalisation

• Subsidy Imbalances: Developed nations offer massive farm subsidies.E.g., US farm aid of $10 billion distorts global price competitiveness.
• FTA Pressures: Demands from countries like New Zealand to lower dairy tariffs threaten Indian farmers.
• WTO Constraints: India’s MSP system faces scrutiny under global trade rules.
• Illegal Imports: Despite bans, cheap imports like Chinese garlic infiltrate markets, undermining domestic prices.
• Retaliatory Tariffs: India’s high tariffs invite reciprocal duties.E.g., the US “reciprocal tariff” policy under Trump era.

Macroeconomic Risks

• Rural Unemployment: Liberalisation could displace small-scale farmers.
• Trade Deficit Worsening: Import liberalisation without export flexibility can widen the deficit.
• Revenue Loss: Tariff cuts may reduce fiscal space for welfare schemes.
• Exposure to Global Shocks:E.g., Ukraine war disrupted fertiliser supply; Indonesia’s ban hiked edible oil prices by 27% in India.

Way Forward

India must adopt a calibrated, strategic approach:

• Selective Liberalisation: Lower tariffs only in non-sensitive sectors while safeguarding essential crops.
• Investment-Oriented FTAs: Prioritise infrastructure, tech transfer, and rural development over tariff cuts.
• Domestic Strengthening: Boost agri-logistics, seed innovation, and food processing capabilities.
• Trade Vigilance: Strengthen customs and surveillance to prevent substandard or banned imports.
• WTO Reforms: Advocate for fair subsidy norms and transparent trade rules.