OPINION: Australia and Indian agriculture’s complex relationship after Trump’s tariffs

While global headlines continue to be dominated by Trump’s tariff oscillations, a more quietly consequential development for Australian agriculture is occurring in South Asia.

The recent decision to impose a 10 per cent tariff on Australia’s exports to the US is bad enough.

But Trump’s 27 per cent tariff on all Indian exports has triggered a seismic tremor in global trade dynamics in the world’s biggest food producer and consumer.

For Australia, this confrontation opens a window of both peril and potential.

India, the world’s most populous nation with more than 1.4 billion people, has historically safeguarded its agricultural sector with tariffs, subsidies and import controls.

The rationale has always been one of rural preservation — roughly half of the Indian population, or about 700 million people are involved in agriculture — yet these workers and their production contribute only about 15 per cent to its GDP.

In stark contrast, modern, highly-industrialised or modern tech economies have drilled their ration of farmers to the rest of the economy down to around 1 in 50.

In the US, less than 2 per cent of the US population is engaged in agriculture, which nevertheless yields staggering productivity thanks to technological scale, large landholdings, and federal subsidies.

The average Indian farmer cultivates less than a hectare of land and heavily subsidised but there are a lot of them, and they are a powerful voting block.

But then so are American farmers, who are far bigger and also heavily subsidised.

In India’s case, there is a legitimate fear that opening the gates to American agri-exports could swamp local markets and obliterate millions of livelihoods.

Yet despite its internal inefficiencies, India has evolved into the world’s eighth-largest exporter of agricultural products — shipping out rice, shrimp, spices, and dairy to the global marketplace.

Its transformation from a food-aid-dependent nation in the 1950s to a self-sufficient agri-powerhouse has been one of the most significant developmental successes of the 20th century.

That success is underpinned by fragile infrastructure and volatile yields.

In many staple crops, Indian yields remain 30–50 per cent lower than global averages.

The Trump administration’s tariff moves, framed as a push for reciprocal trade fairness, directly targets India’s reluctance to import key US commodities like corn, wheat, and genetically modified crops.

US Commerce Secretary Howard Lutnick recently questioned why India would not import “even a single bushel” of American corn.

It sounds like Trump’s complaint that Australia won’t import a singly pound of beef.

The answer lies in India the complex matrix of domestic politics, food security concerns, and economic asymmetry.

India has maintained average weighted tariffs of 37.7 per cent on US farm products, something that’s has no doubt captured the attention of Trump.

The US applies a far lower 5.3 per cent average duty on Indian agricultural imports.

The resulting trade imbalance is politically combustible, as Trump keeps pointing to the US’s $45 billion trade deficit — which has become a rallying point for his tariff attack.

Trump’s approach is not only ad hoc, but resolving trade deficits through brute economic force risks a whole range of international and domestic consequences.

Australia is uniquely positioned yo benefit from India’s fight with Trump.

Bilateral farm trade between India and Australia, while modest compared China or Japan, has grown steadily.

Australia’s key agricultural exports to India include lentils, chickpeas, wool, cotton, wine and, increasingly, processed food products.

In 2023, Australia exported more than $1.3 billion in agricultural goods to India, with pulses accounting for the lion’s share.

But that amount swings widely depending on the mood of the Indian tariff setters who suffer from fear.

They fear the starving people, when dahl, papadam and rice prices are too high.

They also fear of the country’s 200 million grain farmers, when lentil and rice wheat prices are too low.

The Australia-India Economic Cooperation and Trade Agreement, signed in 2022, has reduced barriers for our farmers, particularly for lentils and chickpeas.

Tariffs on lentils, for example, have been reduced to zero during India’s deficit seasons, offering Australian farmers a reliable outlet when domestic conditions align.

However, as with any politically driven commodity, India’s tariffs can swing wildly.

In 2018, New Delhi imposed a short term 30 per cent import duty on chickpeas for domestic political reasons which has become a bad habit of the Indian parliament.

Something that can only get worse if Trumps approach to Tariffs becomes the global norm.

The real determinant of long-term opportunity lies in not only avoiding Trump’s tariffs but in building more free trade opportunities to cash in on developing counties growing middle class.

For example, India’s has more than 600m people under the age of 30 and an urbanisation rate that has reached 35 per cent and rising. The country is poised for a dramatic expansion in consumer demand.

Young people like to consume.

With private consumption in India expected to rise from US$2 trillion in 2022 to US$4 trillion by 2030, food will account for around 30 per cent of their total household spending.

A wealthier India is a hungrier India — but not for rice and lentils alone.

Demand is shifting toward higher-value proteins, oils, dairy, and premium processed foods.

This evolution in consumer preferences mirrors what occurred in China two decades ago.

However, unlike China, India’s political and legal systems are more open and transparent, and its trading relationships are less susceptible to strategic weaponisation.

Yet this opportunity is far from guaranteed.

If India interprets Trump’s tariffs as an existential threat, it may respond by retreating into its protectionist shell.

Indian farmers have shown their political power before.

The 2020–2021 farmer protests over agricultural deregulation drew millions to the streets and forced Prime Minister Narendra Modi into policy reversal.

If India chooses to respond not with retaliation but recalibration — diversifying its import portfolio and seeking friendlier agri-trade partners — Australia could benefit immensely.

Unlike the US, Australia does not push GM crops or heavily-subsidised agri-products.

Our clean, green, and traceable farming model is more palatable to Indian policymakers.

Our products complement, rather than compete with, India’s domestic staples.

The current trade friction could therefore catalyse a rebalancing of India’s import strategies, nudging the subcontinent toward closer alignment with Australian suppliers.

But this will only happen if Australia seizes the moment.

That means deploying more agricultural attachés, hosting bilateral trade expos, funding collaborative research and development, and expanding investment in cold chain logistics across India’s hinterlands.

While Trump’s tariffs may be crafted for domestic political gain, their ripple effects will be felt globally.

If India turns inward, the window narrows.

But if it leans outwards — driven by middle-class ambition, climatic necessity, or diplomatic frustration — then Australia will be ready and WA is on India’s doorstep.

The sleeping giant of Indian demand is stirring.

For Australian agriculture, the path to long-term export growth may not lie in taming the Chinese dragon or beating down Trumps tariffs, but in walking beside the Indian elephant.

Omika Upadhayay is the policy editor at WAFarmers and a graduate of the Himalayan College of Agricultural Science and Technology