US Pulses May Enter India Duty-Free, While Canada Faces Tariff Hike

India is reportedly considering granting duty-free access to US pulses, particularly lentils and dry peas, under a proposed Bilateral Trade Agreement (BTA). The move aims to strengthen trade ties with the US while curbing Canada’s export dominance, two sources familiar with the matter revealed.

If implemented, this policy would impose an import duty on lentils sourced from all other countries, including Canada—India’s leading supplier—while allowing a fixed quota of US lentils to enter duty-free.

“With the import duty applicable to all exporting nations, the US will get duty-free access for a fixed quantity of lentils, similar to the arrangement India has with Australia under a trade agreement,” a source said.

Strategic Trade Shift: Balancing Diplomacy and Domestic Interests

India’s trade relations with Canada have been strained, and this policy shift is seen as a strategic move to prioritize the US while reducing dependency on a single supplier. Currently, Australia and Canada dominate India’s lentil imports, but the new trade arrangement could tilt the scales in favor of US exporters.

Domestic lentil production has been on a steady rise, growing from 1.27 million tonnes (MT) in FY22 to 1.8 MT in FY24, according to the Ministry of Agriculture. The government’s goal is to strike a balance between ensuring sufficient supply and safeguarding local farmers from excessive imports that could depress market prices.

“As domestic production of lentils rises, the aim is to minimize dependency on imports. Proposed policy adjustments will focus on balancing domestic interests with trade commitments,” another source stated.

Rising Consumption and Import Trends

Despite rising local production, India continues to rely on imported lentils to meet demand. According to the Consumer Affairs Ministry, lentil consumption stood at 2.46 MT in FY22 and 2.32 MT in FY23. India’s total lentil imports in FY24 reached 1.84 MT, with the US contributing a mere 0.01 MT. However, with a supply shortfall of approximately 1 MT annually, India is expected to increase imports from both the US and Australia.

As of January in the current financial year (FY25), India has imported 0.96 MT of lentils, including 0.53 MT from Canada, 0.35 MT from Australia, and 0.05 MT from the US. Other contributing nations include Russia and Turkey.

An Australian High Commission spokesperson acknowledged monitoring potential import duties on lentils. Under the Australia-India Economic Cooperation and Trade Agreement (ECTA), Australian lentils will continue to receive a 50% tariff reduction within a quota of 150,000 tonnes per year, should new duties be imposed.

US Lentil Production on the Rise

The US has been ramping up its lentil production significantly. According to data from the US Department of Agriculture (USDA), lentil production increased from 184,000 tonnes in 2022 to 319,000 tonnes in 2024—a 73% jump within two years. This growth aligns with India’s anticipated policy shift, which could open new export opportunities for American farmers.

Protecting Indian Farmers Amid Policy Shifts

Experts believe that this trade maneuver serves a dual purpose—managing diplomatic relations while shielding domestic growers from excessive imports. “The broader goal of this move could be to limit excessive imports to protect local growers and maintain fair prices. Unrestricted lentil imports would hurt domestic farmers by creating a surplus supply and lowering prices,” said Prof. Rakesh Arrawatia of the Institute of Rural Management Anand (IRMA).

Previously, in July 2021, the Indian government reduced the effective customs duty on lentils from 10% to zero, following a similar reduction from 30% to 10% in June 2020. The zero-duty policy remains effective until March 31, 2024, and any upcoming modifications will likely be driven by strategic trade decisions.

Awaiting Official Confirmation

Queries regarding the proposed BTA were sent to spokespersons from the Ministries of Commerce, External Affairs, and Consumer Affairs, as well as the Embassy of Canada, but remained unanswered. A spokesperson from the US Embassy in New Delhi declined to comment, suggesting the Indian side be consulted for details.

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