India EU FTA Agriculture Negotiations Overview

India-EU Free Trade Agreement (FTA) Insights

Overview:

• India and the European Union (EU) are negotiating a Free Trade Agreement (FTA) with significant focus on agriculture, which has been a contentious issue in past trade discussions.

Key Facts & Figures:

• Operational agricultural holdings in India: 146.45 million (2015-16 Census).
• Number of farmer families benefiting from PM-Kisan Samman Nidhi: 97.14 million (April-July 2025).
• U.S. farms: 1.88 million (2024), EU farms: 9.07 million (2020).
• EU Producer Support Estimate (PSE) for 2022-2024: Average of $97.3 billion, equivalent to 16.4% of gross farm receipts.
• U.S. agricultural support: Average of $38.2 billion or 7.1% of gross receipts for 2022-2024.
• India’s input subsidies averaged $47.9 billion for 2022-2024, while direct payments totaled $7.9 billion.
• India's commodity market price support: Average annually at - $129 billion for 2022-2024, resulting in a negative PSE of - $73.1 billion or -14.5% of gross farm receipts.

Constitutional and Legal Context:

• No explicit constitutional references were outlined in the article, but agricultural policies generally align with the Directive Principles of State Policy (DPSPs), Article 39 (e) - the right to work, education, and public assistance in certain cases.

Government Schemes and Policies:

• PM-Kisan Samman Nidhi: An income support scheme for farmers.

Economic Indicators:

• India supports its agriculture sector with a higher percentage of GDP (~2.9%), compared to the EU (0.5%) and U.S. (0.4%).
• In comparison, China's agricultural subsidies far exceed India’s, with a PSE of $270.5 billion (2022-2024).

International Agreements and Considerations:

• EU's recent trade deal with Mercosur countries faced opposition in the European Parliament, reflecting ongoing tensions regarding agricultural imports.
• Concerns regarding increased agricultural imports from the US were articulated, differentiating them from EU prospects, where trade with the EU is seen as less threatening.

Potential Outcomes and Strategic Considerations:

• Indian agricultural exports to the EU include high-value products such as shrimp, rice, and spices, suggesting potential opportunities for Indian farmers.
• The suggestion of imposing a 15% sterilisation duty to counteract EU subsidies indicates a proactive stance on maintaining farmer profitability.

Conclusion: The FTA negotiations with the EU, while complex, reveal India's careful balancing act in safeguarding its agricultural sector while seeking beneficial trade terms that promote exports of competitive products. The contrasting subsidy dynamics between India, EU, and US exemplify the global agricultural trade challenges.