India Secures Key Protections in US Trade Agreement While Opening Market for American Farm Products
In a significant development in bilateral trade relations, India has successfully defended its domestic agricultural interests while agreeing to substantial concessions on American food and farm imports. The agreement, detailed in a joint statement released on Saturday, ensures that India retains critical protections for its dairy industry and genetically modified (GM) crop imports from the United States.
Protection for Sensitive Sectors Maintained
Commerce and Industry Minister Piyush Goyal emphasized that no GM items will be imported to India under this arrangement. Specifically, the country has maintained its stance against imports of genetically modified soyabean and maize (American corn), as well as dairy products derived from cows fed animal-based formulations. "No relief or concession has been given on dairy, maize, soya meal, sugar, millets, and citrus fruits," Goyal stated unequivocally.
This protection extends to addressing long-standing non-tariff barriers, which primarily refer to India's regulatory resistance to GM crops and certain dairy imports. While the joint statement does not elaborate on these barriers, they are understood to include safety and labeling concerns related to biotechnology in agriculture.
Tariff Reductions on US Agricultural Imports
In return, India has committed to eliminating or reducing tariffs on a wide array of American agricultural products. The list includes:
- Dried distillers' grains (DDGs) and red sorghum for animal feed
- Tree nuts such as almonds, pistachios, and walnuts
- Fresh and processed fruits, particularly apples
- Soyabean oil
- Wine and spirits
For tree nuts and fresh fruits, the impact on Indian farmers is expected to be minimal. These crops have limited cultivation in India, and domestic production cannot meet the growing demand. Additionally, safety measures like import quotas and minimum import prices will remain in place. Goyal explained that for apples, "the agreed quota is lower than what we import from the US," with a 20% import duty and minimum price of Rs 80 per kg ensuring a landed price around Rs 100 per kilo.
Strategic Distinctions and Future Negotiations
The agreement makes a clear distinction between unshelled and shelled nuts, with sharper tariff cuts on unshelled varieties to encourage value addition within India. Furthermore, the mention of "additional products" in the joint statement leaves room for future negotiations. This provision allows India to potentially secure greater market access in the United States for its high-performing exports, including:
- Shrimps and fish
- Spices
- Rice
- Tea and coffee
- Rubber
On the export front, many Indian agricultural products will benefit from zero reciprocal tariffs and the removal of additional duties. These include spices, tea, coffee, coconut and coconut oil, and cashew. Goyal reiterated that "no tariff concessions have been granted for agricultural products from US farmers entering India" beyond the specified list, underscoring the balanced nature of the agreement.
This interim deal represents a careful balancing act, protecting India's sensitive agricultural sectors while fostering trade relations with the United States. The unresolved elements, particularly around non-tariff barriers and additional products, set the stage for continued diplomatic and economic engagement between the two nations.
