- People closely following the fortunes of the country’s economic progression in the last few decades would have noticed how the Indian agricultural sector hasn’t metamorphosed along expected lines. Most importantly, the Indian economy is still dependent on agriculture, which is accentuated by the humongous number of people dependent on the sector to make a living. A mind-boggling 650mn people are identified with agriculture would reveal how this critical vertical rightfully demands such great attention from the government authorities. Worryingly, the growth prospects in the sector are abysmal, making it extremely difficult for the government to usher in much needed reforms for fear of antagonizing such a large percentage of people. Farm laws, anyone?
PC: Moneycontrol
- Whereas the services sector has taken off handsomely, manufacturing and agriculture sectors continues to pose challenges to the Indian leadership is stating the obvious. Thus, whatever decisions pertaining to the agricultural sector is always a tough one. Donald Trump’s trade war is also a factor that should be considered by the authorities. Indian think tank has a few days to close a trade with Trump, 09th July to be precise. A delay would be costly because the US is India’s largest trading partner, absorbing 18% of goods exports. Without a deal, the tariff on those will jump from 10% to 26%. Herein lies the catch. Prime facie, trade deals are in farmers’ interest. Boost to manufacturing will create factory jobs and reduce pressure on farming.
PC: Oneindia
- US also needs a deal to crack the Indian market, and right its balance of trade. It produces mountains of soy, wheat, corn, and apples that China doesn’t want anymore. So, the interest is mutual. Trump has already hinted a deal is imminent. He mentioned in his boastful manner: we have one coming up, maybe with India. Very big one. The Indian Finance Minister has responded encouragingly. But there are sticking points. India has 650mn people in farming – almost twice America’s population – to worry about. Most of them are poor, accounting for just 18% of GDP. Easing tariffs on agriculture and dairy would hit them hard. The US demand for access to GM crops is reportedly another red line for India. What’s the way out then?
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PC: Business Standard
- Reports indicate GOI is keen to not cede ground on the question of farm tariffs. But not having a deal may be costlier long-term. For one, 10% tariff is better than 26% when you are competing against the Chinese, who are tariffed at 30% by US. A trade deal would also make India competitive vis-à-vis other low-cost producers like Vietnam and Bangladesh. It would spur foreign investment in Indian manufacturing. But the benefits go beyond economics. Given Trump’s autocratic style, an overly rigid Indian stance would affect US-India engagement in areas like defence. That’s why other countries have been quick to make concessions. Canada, for example, dropped its digital services tax last week, after Trump made it a pretext for cancelling trade talks. India must play its cards quite smartly, here.
