India food and farm sector expect relief as US cut tariff under trade deal

The US reduction of tariffs on Indian products is expected to bring some relief to Indian shrimp and other agricultural products, market participants told Platts. The US is a key buyer of Indian shrimp, rice and spices.

The US has reduced total tariffs on India to 18%, down from 50%, after a trade deal was reached between the two nations, US President Donald Trump said in a Truth Social post Feb. 2. The reduction will take effect immediately, he said.

The US had imposed 25% reciprocal tariffs on Indian products in April 2025 and levied a 25% additional penalty from Aug. 1, 2025, citing high trade barriers and continued oil imports from Russia.

"The US is a key buyer of Indian products such as rice and shrimp," an Indian grain exporter said. "The ongoing tariff issues had weighed on India's export capabilities over the past year."

India-origin shrimp has been facing a total effective duty of 58.26% in the US, the country's largest market, since August.

India is the world's second-largest shrimp producer and exporter after Ecuador, and the US has historically been its largest market, absorbing 40%-48% of export value.

Shrimp exports to US down

In 2025, however, the India-US shrimp trade came under severe pressure after the Trump administration imposed steep tariff hikes.

India shipped 203,659 metric tons of frozen shrimp between January and November 2025, down 10.2% year over year, according to the Ministry of Commerce. During this period, the US share of Indian shrimp exports fell to 30.7% from 37.4% a year earlier, as exporters redirected volumes to alternative markets.

Platts, part of S&P Global Energy, assessed peeled, deveined, tail-on shrimp basis FCA India at $7,491/mt Feb. 2, up $41/mt day over day.

Other than shrimp, India exports rice and spices to the US, while the latter sends nuts, apples and lentils.

India exported 983,471 mt of agricultural products to the US during the marketing year 2024-25 (April-May), according to India's Agricultural and Processed Food Products Export Development Authority. In MY 2023-24, India sold 832,596 mt agricultural products to the US.

India exported $95.46 billion worth of goods to the US, driven by strong flows in steel inputs, ferroalloys, textiles, petroleum products, electronics and gems, according to 2025 trade statistics from the US Census Bureau. In 2024, India had exported $87.4 billion worth of goods to the US, according to S&P Global Market Intelligence.

"The Prime Minister also committed to "BUY AMERICAN," at a much higher level, in addition to over $500 BILLION DOLLARS of US Energy, Technology, Agricultural, Coal, and many other products," Trump said.

This deal comes days after India finalized free trade agreement with the EU Jan. 27.

"Delighted that Made in India products will now have a reduced tariff of 18%," Indian Prime Minister Narendra Modi said Feb. 2 in a post on X. "I look forward to working closely with him to take our partnership to unprecedented heights."

As part of the purchase commitment, India is expected to open its market to US corn, according to industry sources. This creates a new trade flow of US corn entering India specifically for ethanol production.

India may allow the import of US corn as feedstock for Indian ethanol distilleries, giving US farmers a massive new volume outlet, according to market participants. Currently, India bars ethanol production from imported grains and GM crops.

Restoring parity

India's aggressive move toward the E20 ethanol-blending program has created a massive corn supply shortage, according to traders. Distilleries are paying premium prices to secure corn for ethanol, pricing out the poultry and starch industries.

The change would reduce India's tariff burden to 18%, broadly restoring parity with competing origins such as Thailand and Pakistan, where tariffs are around 19%," Prem Garg, national president of the Indian Rice Exporters Federation, said in a statement.

"The federation welcomes the move, which is expected to improve competitiveness and support demand in key markets," Garg said.

"The development could provide incremental support to Indian rice exports as the country enters the season with record output of around 149 million mt and strong export availability," he said.

India's rice exports to the US rose despite an increased US duty to 50% from 10%, Garg said.

"This trend reinforces the federation's view that India's competitiveness is structurally strong, and that tariff parity will translate quickly into higher volumes and improved price positioning," he said. "A tariff reset would improve landed-price competitiveness and support stronger offtake across both basmati and non-basmati categories, enabling India to defend and expand market share in the United States while competing more effectively against other origins."

Platts assessed US CIF New Orleans at $211.90/mt Jan. 30, down $1/mt day over day.