Why Indian farmers fear the new Indo-US deal

As India and the United States move toward implementing a tenuous trade agreement, the Modi government is once again confronting an old political fault line: farmers. Nowhere is this tension sharper than in Punjab, though protests have now spread beyond the state into Haryana and western Uttar Pradesh, where memories of the massive 2020-21 farm protests remain raw and politically consequential.

Those protests forced Prime Minister Modi to repeal three controversial farm laws that were widely seen as a backdoor to agricultural liberalisation without adequate safeguards. The current trade negotiations have already begun reopening those wounds, with farmer groups staging demonstrations and strikes.

At the heart of farmers' anxieties is a familiar fear: exposure to global markets without adequate state protection creates immense wealth for some, while simultaneously deepening existing inequalities and hardships for vulnerable populations.

Liberalisation in Indian agriculture over the past three decades has boosted productivity and integrated its farming community into input and output markets. But it has also increased vulnerability. Rising input costs, particularly proprietary seeds, fertilisers and pesticides supplied by multinational firms, have pushed many smallholders into chronic debt. The tragic pattern of farmer suicides in parts of rural India is widely linked to this debt trap, worsened by volatile prices and weak safety nets.

Although details concerning the new India-US trade deal are still scant, reports and official statements suggest India may consider lowering tariffs or expanding import quotas on select US agricultural products such as almonds, walnuts, pistachios, different types of fruit and vegetables and alcohol.

Government officials argue these are non-sensitive items that do not directly compete with staple crops grown by Indian farmers and will not hurt domestic producers. On paper, that may be partly true. However, domestic corn and soybean prices have already fallen following expectations of increased imports, which is worsening farmer anxieties.

The government has announced wheat and sugar export relaxations, partly to ease farmer anger over the trade deal. However, these export allowances are perceived as a short-term mitigation measure which cannot resolve deeper fears about competition from subsidised American agricultural goods.

Supporters of the Indo-American trade deal argue that closer economic ties with the US are strategically necessary, especially when sensitive crops are being sufficiently protected from tariff concessions. Conversely, many farmers and their unions argue that once tariffs come down for some agricultural products, future negotiations will be able to target staples such as wheat, maize, rice and dairy.

Dairy is also a red line. India's dairy sector is comprised of millions of smallholders with two or three cows, who cannot compete with US industrial-scale farms running hundreds or thousands of cattle with state support and advanced cold chain logistics. Even limited exposure to subsidised American dairy imports could devastate local producers.

Protests are already underway across Bihar, Haryana, Himachal Pradesh, Karnataka, Odisha, Punjab and Tamil Nadu. Managing this widespread agitation will not be easy. Modi's government, now operating within coalition constraints, cannot easily ignore large-scale rural discontent.

For the Sikh farming community, whose relationship with the Indian state has long been marked by grievance and distrust, perceived economic marginalisation risks spilling into deeper political alienation.

In trading leverage with the United States, the Modi government risks alienating rural India, a move which could erode its ethnonationalist grip on power.