The earliest signals came not from customs data but from mandis. Within a week of the announcement, wholesale soybean prices fell by 8 to 11 per cent in Indore, Ujjain and Akola, while maize prices fell by 3-5 per cent in feed-linked markets in Karnataka and Andhra Pradesh.
When the interim trade framework between the United States and India was announced in February, the key figures were designed to convey the balance: Tariffs on Indian exports to the US would fall to 18 percent, while India would commit to buying up to $500 billion, or about ₹41.5 trillion, in US goods over five years. Yet the mathematics of the adjustments underlying the deal reveal a far more unbalanced distribution of risk – which becomes visible only when the national aggregate is broken down into crop prices, per hectare returns and income risks at the household level.
The earliest signals came not from customs data but from mandis. Within a week of the announcement, wholesale soybean prices fell by 8 to 11 per cent in Indore, Ujjain and Akola, while maize prices fell by 3-5 per cent in feed-linked markets in Karnataka and Andhra Pradesh. These moves occurred in the absence of new imports, underscoring an important feature of agricultural trade: pricing is forward-looking. Traders reprice crops on the basis of estimated cost and not on the basis of quantity received.
This expectation effect matters because India’s minimum support price system works unevenly across crops. For soybean, the MSP for the 2025-26 season is ₹5,328 per quintal (about $64), yet average mandi prices in Madhya Pradesh, the largest producing state, were hovering near ₹4,000 even before the trade framework was unveiled. Another ten per cent price compression – even within the range implied by modest tariff liberalization – pushes real prices up to ₹ 3,600 per quintal, widening the gap between MSP and market price to about ₹ 1,700 per quintal.
For small farmers cultivating two hectares with an average yield of ten quintals per hectare, this translates into a gross revenue shortfall of about ₹34,000 per season relative to the MSP benchmark. That shape is not abstract. According to NABARD household surveys, the average annual net farm income of small and marginal farmers in central India ranges between ₹90,000 and ₹1.2 lakh, meaning trade-induced price differences alone can reduce 25-35 per cent of annual farm income in a single crop cycle.
Mecca, which covers more than 12 million hectares nationwide, offers an even more stark example of structural vulnerability. Maize MSP is ₹2,400 per quintal (≈$29), yet market prices in southern India often remain at ₹1,700-1,900, reflecting weak offtake and strong integration with global feed markets. In line with the movements seen following import policy signals, just a five per cent fall in the tariff-driven price reduces farm-gate prices by Rs 80-100 per quintal, increasing losses for producers who are already operating below the official support level.
When scaled up, the exposure is larger. Madhya Pradesh and Maharashtra account for about 10 million hectares of soybean cultivation, while Karnataka, Andhra Pradesh and Telangana account for about 4 million hectares of maize cultivation. Even assuming conservative yields, the difference of ₹1,500–₹2,000 per quintal versus MSP reflects total revenue compression running to ₹30,000–₹40,000 crore ($3.6–4.8 billion) under sustained price pressure in these states – with losses concentrated among households least able to hedge, store, or delay sales.
The disparity becomes more stark than the conditions faced by American farmers. US agriculture receives approximately $42 billion (≈₹3.5 trillion) annually in direct federal support, excluding crop insurance subsidies and ad hoc disaster payments. Spread across less than 2 million farms, this equates to an average support of more than $20,000 per farm, with far more effective protection for larger producers. In contrast, in India, while total agricultural support exceeds $80 billion (₹6.6 trillion), it is still distributed among more than 120 million farmers, yielding a per-farmer buffer that is an order of magnitude larger – and often unrealized in cash terms.
This imbalance is not accidental; This supports the broader geopolitical logic underpinning the deal. Washington’s trade strategy has shifted from maximizing efficiency to shifting supply-chain dependence away from China. Manufacturing diversification towards India and Bangladesh is a medium-term project, hampered by infrastructure, labor skills and regulatory frictions. Conversely, agricultural imports could increase immediately, providing measurable trade-balance benefits and political dividends to US agricultural states.
Bangladesh’s clothing provisions demonstrate how deliberately this logic is applied. By providing zero-tariff access to apparel made from American cotton, the agreement effectively redirects demand for raw materials from Indian cotton – previously valued at about $3 billion (₹250 billion) annually in exports to Bangladesh – and links Dhaka’s manufacturing sector more tightly to American upstream supplies. The result is a quiet but consequential reconfiguration of South Asian value chains: American cotton has replaced Indian lint; Bangladeshi factories retained market access; Indian textile centers absorb the displacement.
Gardening follows a similar pattern at higher margins. In 2024, India imports US tree nuts worth more than $1.1 billion, which already accounts for about 70 percent of its nut imports. A 15-20 percent expansion in volumes – within historical demand elasticity following the tariff drop – would add $150-200 million in export revenues for U.S. producers. However, for Indian apple growers in Jammu and Kashmir and Himachal Pradesh, even a ten percent drop in price at the farm gate – due to increased shelf space due to cheaper imported apples – could result in a loss of ₹2,000-₹4,000 per tonne in margins, a significant blow in regions where average orchard incomes are under increasing climate and cost pressures.
Overall, these figures make the underlying dynamics clear. The trade framework does not just open up markets; This reallocates the volatility. Price risk is shifted from a capital-intensive, heavily insured farming system to a labour-intensive system, where MSP acts more as a benchmark than a guarantee. Manufacturing benefits from supply-chain diversification are real but unevenly distributed, while agricultural adjustment is immediate, widespread, and politically sensitive.
In dollar terms, the agreements appear to be mutual. In rupee terms and household income, they are not. The data show that without expanded procurement, price-deficiency payments, or direct income support commensurate with trade risks, the burden of adjustment will continue to fall on millions of smallholder farmers, whose margins are already tight.
This is the core contradiction at the core of the deal: a strategy designed to reduce geopolitical dependence on China is being funded, in part, through the tacit reevaluation of rural livelihoods in South Asia.
