Safeguarding Rural Livelihoods: India’s Strategic Restrictions

SYNOPSIS

Through targeted export restrictions, budget increases, and strategic policies, India continues to strike a balance between global trade and rural welfare while addressing food security, farmer incomes, and trade commitments in the face of shifting market dynamics and climate risks.

India’s restrictions strengthen rural livelihoods through agriculture, local industries, and economic stability.

With about 43.5 – 46% of its workforce employed in agriculture and 15 –18% of its GDP coming from this sector, India still depends on trade policy, export restrictions, and subsidies to support rural incomes and ensure a steady supply of food.

1. Export Control

• Rice: In March 2025, India lifted all restrictions on rice exports to support the goal of increasing agri-exports to $100 billion and philanthropic donations to $1 billion by 2030. Despite this restriction lift, the global prices of rice fell from $669 to $405/tonne, allowing countries that imported rice to capitalize on a reasonable price, such as Pakistan and African nations.

• Onions: A 20% export duty was lifted on onions on 1 April 2025 after five months of no duties for policy reasons meant to enable farmers to receive income protection while ensuring domestic supply.

• Wheat & Sugar: A record 115 MMT harvest in 2025-2026 notwithstanding, India will likely maintain export restrictions on wheat to protect domestic 'stocks' and contain inflation; similarly for some exports of sugar.

2. Policy Support & Budget Enhancements

• The significant agriculture budget for 2025-26, which reflects a 15% increase over the previous year's budget to ₹1.75 trillion (~$20 billion) and reflects the major agriculture sectors: high-yield seeds, storage, pulses, oilseeds, dairy, supply chains, subsidised supports, and crop insurance - was the biggest increase in the agriculture sector in 6 years.

• The expansion of farm loan subsidies from ₹300k to 500k and 109 million in farm incentives to food processing industries are two such measure of support.

3. Balancing Trade Negotiations

• India has registered opposition to tariff reductions on sensitive agri-products, dairy, maize, soybeans, and wheat in the ongoing trade negotiations between the United States of America and Australia.

• India faces potential income loss for farmers, as well as opposition from the agricultural organization in India for the use and production of genetically modified crops.

4. Worldwide Effects & WTO Reaction

• Wheat prices have gone up about 9%, while rice prices increased around 15%-20%, due to the global supply shocks caused by restrictions on exports, and they have particularly affected the countries that are food insecure.

• National export restrictions must be put on the table in the food security discussions at the WTO meeting in June 2025.

5. Growth in Processed Exports

• India is now refocusing on producing high-value, processed agricultural products, such as bananas, mangoes, mango pulp, and potatoes, to reach a target of $100 billion in exports.

• Plans are underway for export clusters in regional centres, i.e., Jalgaon and Malihabad.

  
  

Conclusion

India has taken policies related to export control, budgetary support, as well as trade positioning to increase its market share in the global markets while ensuring food security.

Srishti Bhardwaj