December 11, 2009
News Release 09-104
Inv. No. 332-504
Contact: Peg O'Laughlin, 202-205-1819
U.S. Exports Hold Small Market Share Despite India's Rapid Economic Growth
U.S. farmers and food manufacturers lose millions of dollars each year in lost sales to India
because of high tariffs and a wide array of nontariff measures (NTMs) that substantially raise the
cost or effectively prohibit U.S. agricultural exports to the world's second most populous country,
reports the U.S. International Trade Commission (USITC) in its report India: Effects of Tariffs
and Nontariff Measures on U.S. Agricultural Exports.
The USITC, an independent, nonpartisan, factfinding federal agency, completed the report at the
request of the U.S. Senate Committee on Finance.
As requested, the report provides an overview of Indian agricultural production, imports, and
consumption during 2003 08; Indian tariffs and NTMs; the Indian food marketing and
distribution system; and Indian government regulations relating to the agricultural market,
including foreign direct investment and intellectual property rights policies. The study also
provides economic modeling analysis of the effects of Indian tariffs and certain NTMs on U.S.
agricultural exports. Highlights of the report follow.
- The United States was the world's leading agricultural exporter by value, $116 billion in
2008, with a 17 percent share of global export markets in 2008. Yet, U.S. exports to India
amounted to just $497 million or 6 percent of the Indian agricultural import market in
- Indian WTO bound tariff rates on agricultural products, averaging 114 percent, are among
the highest in the world. The majority of rates are between 50 and 150 percent, much
higher than the average bound rates for other major developing countries such as Brazil
- Average applied agricultural tariff rates have declined significantly from 113 percent
since 1991, prior to Indian economic liberalization, to approximately 34 percent in 2007,
but they remain among the highest in the world.
- The wide gap between high bound rates and lower applied rates allows India to vary its
tariff rates frequently and substantially on certain commodities, which creates uncertainty
for U.S. agricultural exporters.
- Broad intervention by the Indian government in the agricultural sector, including
restrictive agricultural trade policies, is focused on three core domestic policy objectives:
food security, food self-sufficiency, and income support for farmers.
- Agriculture is vital to the Indian economy, representing 17 percent of GDP and providing
employment for more than 60 percent of the population. India is a major global producer
of agricultural products and is largely self sufficient in agricultural production. Indian
agricultural imports are relatively small and concentrated and supplied only 3 percent of
Indian agricultural demand in 2008.
- Indian per capita food consumption, centered on staple foods, is low compared to other
developing countries, but is rising with income growth. Rising income among
middle-class Indians (200 300 million consumers) is driving increased consumption of
- Despite the size of the Indian market, inefficiencies in India's marketing and distribution
system make it less attractive for U.S. agricultural producers. Marketing and distribution
inefficiencies result from high levels of government intervention, poor quality and limited
availability of storage and transportation infrastructure, and other factors.
- U.S. agricultural firms are active participants in the Indian market through foreign direct
investment (FDI). FDI allows U.S. firms to adapt products to local needs and
requirements and bypass tariffs and NTMs that constrain exports.
- Indian intellectual property rights (IPR) policies reportedly are of critical importance to
U.S. seed firms operating in India, but U.S. firms in most other agricultural sectors do not
identify IPR as a significant trade or investment barrier.
India: Effects of Tariffs and Nontariff Measures on U.S. Agricultural Exports (Investigation No.
332-504, USITC Publication 4107, November 2009) will be available on the ITC's Internet site at
http://www.usitc.gov/publications/332/pub4107.pdf. A CD-ROM of the report may be requested
by e-mailing email@example.com, calling 202-205-2000, or contacting the Office of the
Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
Requests may also be faxed to 202-205-2104.
USITC general factfinding investigations, such as this one, cover matters related to tariffs or trade
and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate
Committee on Finance. The resulting reports
convey the Commission's objective findings and independent analyses on the subjects
investigated. The Commission makes no recommendations on policy or other matters in its
general factfinding reports. Upon completion of each investigation, the ITC submits its findings
and analyses to the requester. General factfinding investigation reports are subsequently released
to the public unless they are classified by the requester for national security reasons.
-- 30 --