India-US Trade Deal: Key Farm Items Excluded from Tariff Concessions
In a significant development for bilateral trade relations, India is poised to exclude a range of sensitive agricultural products from tariff concessions under the first tranche of its trade deal with the United States. A joint statement on the framework agreement is expected to be issued in the coming days, as reported by Sidhartha.
Negative List for Import Concessions
According to sources familiar with the deliberations, items such as animal feed, ethanol for fuel, poultry, flowers, and tea are likely to be placed on a negative list, meaning they will not receive import concessions from India. This move aligns with Commerce and Industry Minister Piyush Goyal's assurance that India's sensitivities in agriculture and dairy sectors are being safeguarded.
Other key products excluded from tariff concessions include:
- Rice, wheat, and other cereals
- Dairy products
- Soymeal and maize
- Meats and genetically modified (GM) food products
- Potatoes, onion, garlic, copra, atta, chicken, and tobacco
Protecting Domestic Farmers and GM Concerns
India has historically kept dairy and agriculture out of its trade agreements, including those with the UK and the European Union. Officials argue that Indian farmers, many of whom have small land holdings and practice subsistence farming, would be adversely affected by even limited imports of wheat and rice.
Genetically modified food is another major area of concern. The government has reservations about allowing GM products into the country, and permitting American corn imports could open the door to such foods, which has been actively resisted. Additionally, allowing ethanol blending could negatively impact sugarcane growers.
Calibrated Opening and Reciprocal Benefits
Even in non-agricultural product segments, the government plans a calibrated approach, opting for quotas in items like apples—similar to strategies used with the EU and New Zealand—and implementing long phasing periods for tariff reductions.
As part of the bilateral trade agreement (BTA) framework, the US has agreed to lower reciprocal tariffs for Indian exports to 18%, down from 50%. This reduction includes the removal of a 25% secondary or penal tariff previously imposed due to India's purchase of Russian oil.
In terms of trade volume, India's agricultural imports from the UK are estimated at over $2 billion, while exports stand at around $3.4 billion, highlighting the importance of protecting domestic interests in ongoing trade negotiations.
