How FTAs with US, UK, EU Could Impact India’s Agriculture Trade
Introduction: Why is this in News?
India’s agriculture exports rose by 6.4% to $51.9 billion in 2024–25, marking a modest recovery after a dip in 2023–24. Despite this improvement, agriculture trade remains sensitive to global dynamics, especially Free Trade Agreements (FTAs) that India is currently negotiating with the US, UK, and the EU. These negotiations are crucial because India’s agriculture trade surplus is shrinking, while its import of pulses, edible oils, and fruits is increasing.
This is significant for CLAT Current Affairs 2026 and aspirants of UPSC and other law exams, as it touches upon trade policy, food security, economic diplomacy, and international law.
Summary: Key Takeaways from the Article
- Agriculture Exports and Imports Overview
- India’s agriculture exports in 2024–25 reached $51.9 billion, up from $48.8 billion in 2023–24.
- Agriculture imports also rose to $38.5 billion, leading to a reduced trade surplus.
- The trade surplus fell from $27.7 billion in 2020–21 to $13.4 billion in 2024–25, indicating increased dependence on agricultural imports.
- Export Trends and Top Products
- Top export items (by value in million $):
- Marine products: $7,405
- Basmati rice: $5,472
- Spices: $5,248
- Sugar: $2,884
- Buffalo meat: $3,464
- Non-basmati rice also saw a rise in export value: $5,271 million in 2024–25.
- The export performance of cotton, wheat, and sugar dropped due to domestic shortages.
Import Trends and Key Items
- India’s top agricultural imports in 2024–25 (in million $):
- Vegetable oils: $13,478
- Pulses: $4,238
- Fruits: $3,274
- Cashew: $2,215
- Natural rubber: $1,575
- Rising imports are driven by low domestic production, high demand, and lack of procurement policy parity (especially for pulses and oilseeds).
- FTAs and their Potential Impact
- India is currently negotiating FTAs with the US, UK, and EU.
- These FTAs may lead to:
- Lower tariffs on imported agricultural goods like dairy, apples, wine, wheat.
- Pressure on Indian farmers and MSMEs due to increased foreign competition.
- Potential reduction in India’s export competitiveness if support policies are not strengthened.
- Drivers Behind Export Performance
- Exports driven by:
- Higher international prices (for basmati rice, spices).
- Improved logistics and global demand.
- Cotton, wheat, and sugar exports declined due to:
- Domestic shortfalls.
- Export restrictions to control inflation.
- Drivers Behind Import Growth
- Vegetable oils and pulses form the bulk of imports:
- Prices are globally high.
- India lacks a strong domestic procurement system for oilseeds.
- Fruits, alcoholic beverages, and natural rubber also saw sharp import growth.
- Import of GM (genetically modified) crops still faces restrictions in India.
- Broader Economic Significance
- India is a net exporter of agriculture goods, but the gap is shrinking.
- Increasing imports, especially from countries with FTAs, could challenge food security, rural income, and price stability.
- A policy recalibration is needed to support Indian agriculture amid global competition.
Graphical Insights from the Article
India’s Agriculture Trade (2013–2025)
- Exports peaked at $53.1B in 2022–23, dipped slightly, and have rebounded.
- Imports have steadily risen from $15.5B in 2013–14 to $38.5B in 2024–25.
India’s Top Agri Export Items (2021–2025)
- Marine products consistently lead exports.
- Basmati and non-basmati rice have grown, reaching nearly $11B combined.
India’s Top Agri Import Items (2021–2025)
- Vegetable oils dominate, contributing to over 30% of agri imports.
- Pulses, fruits, and alcoholic beverages show steady import growth.
Explanations of Peculiar Terms (CLAT-Friendly Notes)
- FTA (Free Trade Agreement):
- A treaty between countries to reduce tariffs, duties, and trade barriers.
- India’s FTAs with US, UK, EU could allow easier import/export of agricultural products.
- Agriculture Trade Surplus:
- Occurs when the value of exports is higher than imports.
- India’s surplus dropped from $27.7B (2020–21) to $13.4B (2024–25).
- Basmati vs Non-Basmati Rice:
- Basmati is aromatic long-grain rice, mainly exported to Gulf countries.
- Non-basmati is more common and affordable.
- GM Crops (Genetically Modified):
- Crops whose DNA has been modified for higher yield or resistance.
- India restricts the import of food products containing GMOs.
- Oleoresins:
- Natural plant extracts used in food and cosmetics.
- India exports oleoresins from spices like pepper and turmeric.
Relevance for CLAT 2026 Aspirants
Indian Economy
- Trade balances, FTAs, and agriculture exports are part of macroeconomic indicators.
- Essential for understanding food security, pricing, and farm incomes.
Legal and Policy Framework
- FTAs are signed under the Foreign Trade (Development and Regulation) Act, 1992.
- India’s trade decisions are shaped by WTO agreements and bilateral treaties.
Governance and International Relations
- Negotiating FTAs is part of India’s foreign policy and economic diplomacy.
- The implications affect farmers, consumers, and exporters across India.
Timeline: Trade Shifts in Agriculture (2013–2025)
Year | Milestone |
2013–14 | Agri exports: $43.9B, imports: $15.5B |
2020–21 | Peak surplus at $27.7B |
2022–23 | Exports peak at $53.1B |
2023–24 | Exports drop to $48.8B |
2024–25 | Rebound to $51.9B exports, imports at $38.5B |
Challenges in Agricultural Trade
- Import Dependence on oilseeds and pulses.
- Non-tariff barriers by other countries (like EU quality standards).
- Climate change causing domestic shortages (droughts, floods).
- Lack of competitive support policies for Indian farmers vs. foreign subsidies.
Future Prospects and Policy Suggestions
- Promote domestic oilseed and pulse production through MSP and incentives.
- Ensure tariff protection in FTAs for sensitive crops like dairy, wheat, sugar.
- Build robust agri-export infrastructure, especially cold chains and ports.
- Strengthen food processing industry to reduce export dependency on raw goods.
Conclusion
India’s agriculture trade scenario is at a critical juncture. While exports have shown resilience, rising imports and shrinking trade surpluses are warning signs. The upcoming Free Trade Agreements (FTAs) with the US, UK, and EU could dramatically reshape the landscape of agriculture, food security, and farmer incomes. For CLAT 2026 aspirants, understanding the implications of such international agreements is essential not just for General Knowledge sections, but also for developing a nuanced understanding of law, policy, and economics.
