There has been a great deal of controversy following the Trump administration pointing out that India has one of the highest import tariffs globally, especially on agricultural products. This claim is not too off the mark. According to the World Trade Organization (WTO), India had the third-highest applied Most Favoured Nation (MFN) tariff on agricultural products in 2023, averaging 39 per cent.

According to WTO’s World Tariff Profiles 2024 report, among 153 countries, South Korea, Turkey, and India levy the highest MFN tariffs on agricultural goods at 57 per cent, 39.8 per cent, and 39 per cent, respectively.

The WTO releases an annual report on the World Tariff Profiles every year. The report categorises tariffs into two types. The MFN tariff, which is a non-discriminatory rate that countries impose on imports from other WTO members unless they are part of a preferential trade agreement. The second is the bound tariff, which represents the maximum tariff a country can impose on products. MFN tariffs are the most used baseline for imports.

‘Tariffs protect Indian farmers’

Vivek Mishra, Deputy Director of the Strategic Studies Programme at Observer Research Foundation, explained that the import tariff on agricultural products is high because India is structurally an agricultural economy. The government provides subsidies on agricultural goods and implements various barriers to protect farmers interests. “If agricultural products from other countries start competing on a large scale in India, it could create significant challenges for local farmers,” Mishra noted.

The founder of Global Trade Research Initiative, Ajay Srivastava, agrees: “In India, agriculture is a livelihood issue rather than a trade issue. Whereas, less than 2 per cent of the US population depends on agriculture. Therefore, higher tariffs on agricultural products help protect the interests of Indian farmers.”

The data shows that Singapore, Brunei Darussalam, and Australia are the bottom three countries which have applied the least MFN tariffs on agricultural goods in 2023 with 0.1 per cent, 0.1 per cent, and 1.2 per cent, respectively.

Year-wise data show that India imposes higher tariffs on both overall products and agricultural products compared to the US. In 2017, India’s MFN tariff was 13.8 per cent on all products and 32.8 per cent on agricultural products, whereas the US’ MFN tariff stood at 3.5 per cent and 5.1 per cent, respectively. By 2023, India’s MFN tariff had risen to 17 per cent on all products and 39 per cent on agricultural products, while the US’ MFN tariffs slightly declined to 3.3 per cent and 5 per cent, respectively.

Among the 20 items on which India imposes import tariffs, beverages and tobacco, oilseeds, fats and oils, sugars and confectionery, rank at the top with 74.5 per cent, 60.1 per cent and 51.5 per cent, respectively.

On how India can tackle the reciprocal tariffs imposed by US, Mishra said: “India can choose to lower tariffs on selected goods and use them as a bargaining tool with the US. Increasing domestic production and gradually reducing tariffs could help in narrowing the trade deficit with the US.”

The Journal for Applied Economic Perspectives and Policy explains that, “While India is a prominent producer of numerous agricultural commodities, it still depends on imports for certain commodities, especially from the US, due to its burgeoning population and rising incomes.”

Published on March 24, 2025