India, Trump, and the farmers

India’s farmers need better tools and support to compete with farmers around the world. Right now, the government uses high taxes on farm products from other countries to protect local farmers. This makes imported food expensive, but it can’t last forever.

Today, former US President Donald Trump plans to raise taxes on products from countries that charge high taxes on American goods. Canada, Mexico, and China are ready to hit back, but India is trying to stay friendly. India recently lowered taxes on things like bourbon whiskey and removed a tax on online ads to keep good trade relations.

India sells a lot to the US—about $45.7 billion worth last year—and needs the American market. But Trump wants a fair deal. In 2008, the US complained that India bought less than 1% of American farm goods because India’s taxes on them were so high—some were as high as 150%! Today, India’s average tax on farm goods is 39%, but some products like coffee and vegetable oils are taxed at 100% or more. Meanwhile, the US charges much lower taxes on Indian farm products.

India can’t lower these taxes easily. Farming in India is very different from farming in the US. About 700 million Indians work in farming—twice the population of America! But farms in India are small, and many farmers don’t earn much. In the US, only 2% of people are farmers, but they earn more money and produce a lot more food.

If India lets in cheaper American farm products, many Indian farmers could struggle to compete. Lowering taxes now would hurt them, so the government needs time to make Indian farming stronger. India can avoid Trump’s tariffs for now, but sooner or later, it will have to let foreign farm goods in. It’s time to help Indian farmers become competitive so they can succeed without high taxes protecting them.