Agriculture key focus in early India-US trade talks
Hindustan Times - 07 March 2025
Agriculture key focus in early India-US trade talks
ByRajeev Jayaswal
Agricultural produce has emerged as one of the key focus areas of the ongoing discussions between India and the US for a trade deal, people familiar with the matter said, adding that despite popular perception, it is possible for either country to enhance market access for produce by reducing tariffs and removing non-tariff barriers.
“It can be done on reciprocal basis as the two countries are complementing, and not competing with, each other in a host of items, making greater market access for those items possible without hurting their respective farming communities,” one of them said citing pulses, edible oil, tree nuts, forest products, and frozen turkey and frozen duck as products that India could import from the US.
The people, who asked not to be identified, said that apart from the demand to reduce tariffs on automobiles, the Trump administration is keen for greater access to Indian markets for a variety of American agricultural produce. In some cases, this will require reduction in tariffs, they added, and in other, it will require the scrapping of non-tariff barriers. The approach would focus on “complementarities” the people said, emphasising that “sensitivities” of both countries would be taken into account. The reference is to strong agricultural lobbies in both countries. To be sure, the fact that India already imports pulses, edbile oil, and frozen meat products, will help.
While US President Donald Trump on Wednesday reiterated that reciprocal tariffs would come into effect from April 2 — he cited high tariffs in countries such as China, Brazil and India — Indian officials held out hope for a resolution that could help India escape the tariffs that Trump has threatened to impose, and eventually culminate in a trade deal by this fall.
According to two other officials, who spoke on the condition of anonymity, India will consider rationalising import taxes in areas where domestic farmers would be least impacted. The state-owned Niti Aayog, a policy think tank, in a report assessing the likely impacts of the proposed American reciprocal tariffs determined that the tweaks to duties must be done “for our own” benefit, one of these officials said.
“Lowering and rationalising of tariffs on agricultural commodities will increase overall trade and help Indian exports gain better markets in the US and north America,” the review, seen by HT, stated.
On Thursday, speaking at a post-budget event in Vishakapatnam, finance minister Nirmala Sitharaman told exporters that India is engaging with the US to protect its exports, citing commerce minister Piyush Goyal’s presence in the US for trade talks.
The people cited in the first instance said that New Delhi may resort to “trade diversions” — sourcing products it currently does from other countries from the US instead — to address Washington’s concerns of a huge bilateral trade deficit. The trade deficit between the two countries in 2023-24 was $35.3billion in India’s favour. “For example, India may import significant volume of its energy requirements from the US instead of the Middle East or Russia. It can also import soyabean oil from the US instead of Argentina and Brazil,” one of them explained.
The focus of the talks right now is to prepare lists for “early harvest”, a second person said, adding that the two countries will prepare “ a road map to conclude a bilateral trade agreement (BTA) by the fall of 2025 as agreed between Prime Minister Narendra Modi and President Donald Trump on February 13, 2025.
In a joint statement on February 13, the two leaders announced “Mission 500”, which aims at $500 billion bilateral trade by 2030. According to the website of the US Trade Representative (USTR), America’s total goods trade with India were estimated at $129.2 billion in 2024.
Agriculture produce is a natural choice for “early harvest” the second person said.
“The US is eyeing India for agri exports because India imports about $40 billion of agricultural and related products from the world and it should allow the US to take a share in that pie without hurting its interest.”
For instance, the US wants market access to the Indian soyabean oil market estimated at $5 billion, he added. Soybean is India’s second most imported edible oil after palm oil, the person said adding that the US wants preference over Argentina and Brazil. Similarly, it is willing to supply pulses replacing Burma, Canada, and Australia as India is the world’s largest importer of legumes worth about $2.5-3 billion, he said.
