The India-US Trade Pact: A New Era for Millions of Indian Farmers

The relationship between India and the United States has reached a historic milestone in February 2026. After months of intense negotiations, both nations have finalized a landmark interim trade agreement that promises to reshape the economic landscape. For a country like India, where agriculture is the backbone of the economy and the primary source of livelihood for over half the population, the stakes could not be higher. This trade pact is not just about numbers and tariffs; it is about the future of millions of small and marginal farmers who form the heart of rural India.

​For years, trade discussions between these two giants were often stalled by concerns over protecting domestic industries. However, the 2026 agreement aims to find a middle ground opening doors for Indian exports while keeping a protective shield over the most sensitive parts of the Indian farm.

​

What Exactly Is the India-US Trade Deal?

​At its core, the new trade pact is designed to make it easier for goods to move between India and the US by reducing the "taxes" or tariffs that usually make imported goods more expensive. One of the most significant wins for India is the reduction of US reciprocal tariffs on a wide range of goods from as high as 50% down to a uniform 18%. In certain high-value sectors, the US has even agreed to zero-duty access for Indian products.

​For the Indian farmer, this is a double-edged sword that requires careful handling. On one hand, it allows Indian-grown products to compete more effectively in the massive $30 trillion US market. On the other hand, it opens the Indian market to some American agricultural products. The government has stressed that this is a "calibrated opening," meaning they are opening the doors slowly and only for specific items.

​The Shield: Protecting Sensitive Sectors

​The biggest fear for Indian farmers has always been the influx of cheap, subsidized agricultural products from the US, such as dairy and staple grains. If American milk or wheat were to flood the Indian market at lower prices, it could potentially bankrupt local farmers who cannot compete with the sheer scale of US industrial farming.

​To prevent this, the Indian government has "ring-fenced" or protected what they call "sensitive" products. This means that for these specific items, India has granted no duty concessions to the US. These protected items include:

• ​Staple Grains: Rice (including Basmati), Wheat, Maize, and Millets like Ragi and Jowar.

• ​Dairy Products: Milk, Ghee, Butter, Cheese, and Curd.

• ​Poultry and Meat: All poultry products and most meat categories.

• ​Sugar and Tobacco: Key cash crops that support millions of families.

​By keeping these items off the table, the government aims to ensure that the basic food security of India and the income of its most vulnerable farmers remain untouched by international competition.

​The Opportunity: New Markets for Indian Produce

​While the shield protects the staples, the "sword" of the agreement is the new access Indian farmers get to the American consumer. Several Indian agricultural and horticultural products will now enjoy zero-tariff access to the US. This is a massive boost for farmers who grow high-value crops that are in high demand in the West.

​Imagine a mango farmer in Maharashtra or a tea grower in Assam. Previously, their products might have faced high import duties in the US, making them more expensive than products from other countries. Now, they can compete on a level playing field. Key products that will benefit from this zero-duty access include:

• ​Fruits and Vegetables: Mangoes, bananas, guavas, kiwis, pineapples, and mushrooms.

• ​Spices and Extracts: India’s world-renowned spices, tea, and coffee.

• ​Specialty Items: Coconut oil, cashews, Brazil nuts, and certain organic extracts.

​By removing these barriers, the deal encourages Indian farmers to diversify their crops. Instead of sticking only to traditional grains, there is now a financial incentive to grow fruits and spices that can be exported for a much higher profit.

​The Indirect Boost: Textiles and Cotton Farmers

​One of the most interesting parts of this trade deal is how it helps farmers indirectly through the textile industry. India is one of the largest producers of cotton in the world. The trade pact has significantly reduced US tariffs on Indian textiles and apparel from 50% to 18%.

​When Indian garment factories sell more shirts and sheets to the US, they need more raw material—cotton. This increased demand at the factory level trickles down to the cotton farmers in states like Gujarat and Telangana. By boosting the "Make in India" initiative in the textile sector, the deal effectively supports the millions of farmers who grow the fibers for those products.

​What Is India Giving in Return?

​Trade is a two-way street, and the US has also gained access to the Indian market for certain agricultural goods. To balance the deal, India has agreed to reduce or eliminate tariffs on items that are not considered "sensitive" to the majority of Indian farmers but are important to the US. These include:

• ​Tree Nuts: Almonds and walnuts.

• ​Fresh Fruits: Specific varieties of apples and cherries.

• ​Animal Feed: Red sorghum and dried distillers' grains, which are used to feed livestock.

• ​Soybean Oil: A move that might increase competition for domestic oilseed farmers but helps keep cooking oil prices stable for consumers.

​While some critics argue that these concessions might hurt specific groups of farmers—like apple growers in Himachal Pradesh—the government argues that these imports are necessary to lower costs for Indian consumers and provide better feed for India’s growing poultry and dairy industries.

​Balancing Growth and Ground Realities

​The success of this trade pact will ultimately depend on how well Indian farmers are supported during this transition. While the deal opens "the floodgates to technology" and new markets, the average Indian farmer owns less than two hectares of land. They lack the cold-storage facilities, modern logistics, and processing units needed to meet strict US quality standards.

​To bridge this gap, the government is focusing on a "cluster model." By organizing small farmers into groups, they can share the costs of modern machinery and storage. The pact also includes a 10-year "adjustment space" for certain products, meaning tariffs will be phased out slowly to give local players time to adapt.

​The Road Ahead for Rural India

​The India-US trade pact of 2026 is a bold step toward integrating India into the global supply chain. For the first time, Indian farmers are being viewed not just as people who need protection, but as exporters who can feed the world.

​If implemented correctly, this agreement could lead to higher incomes, better technology on the farm, and a more stable rural economy. However, it will require constant monitoring to ensure that the "shield" stays strong and that the benefits of the "sword" reach the smallest of farmers, not just the big exporters.

​The message from the government is clear: India will not compromise on its food security, but it will also not stay closed to the opportunities of the future. For the millions of farmers watching from their fields, the 2026 trade deal is a promise of a new, global chapter for Indian agriculture.