India's Calibrated Tariff Strategy in US Bilateral Trade Agreement
The Indian government announced on Monday that it has implemented a carefully calibrated approach to tariff liberalization under the India-US Bilateral Trade Agreement. This strategic framework allows for duty elimination in progressive phases spanning up to ten years for specific products while ensuring comprehensive protection for highly sensitive agricultural sectors.
Structured Agricultural Market Access
According to an official government statement, agricultural market access for the United States has been meticulously structured based on product sensitivity, aligning with India's established methodology in previous trade agreements. The tariff offer has been systematically categorized into multiple mechanisms including immediate duty elimination, phased elimination over extended periods, tariff reduction, margin of preference, and tariff rate quota systems.
Complete Protection for Sensitive Sectors
Highly sensitive agricultural sectors remain fully shielded under what the government describes as a "carefully crafted exemption category." This comprehensive protection encompasses a broad range of products including meat, poultry, and dairy products; genetically modified food items; soyameal; maize; cereals; and various millets such as jawar, bajra, ragi, kodo, and amaranth.
The protected list further extends to:
- Fruits including bananas, strawberries, cherries, and citrus varieties
- Pulses such as green peas, kabuli chana, and moong
- Oilseeds and certain animal feed products
- Groundnuts, honey, malt and its extracts
- Non-alcoholic beverages, flour and meals, starch
- Essential oils, ethanol for fuel, and tobacco products
Phased Elimination for Intermediate Products
The government has adopted a phased tariff elimination approach extending up to ten years for specific intermediate products utilized by India's food processing industry and sourced from multiple countries. This extended timeline is designed to provide adequate adjustment space for domestic stakeholders.
Products subject to this phased liberalization include:
- Albumins and certain oils including coconut oil, castor oil, and cotton seed oil
- Hoofmeal, lard, and stearin
- Modified starches, peptones and their derivatives
- Plants and parts of plants
Tariff Reduction for Select Sensitive Items
For certain sensitive agricultural products, the government has applied tariff reduction measures to ensure continued duty protection at measured levels. This category includes parts of plants, olives, pyrethrum, and oil cakes. Alcoholic beverages have similarly been placed under tariff reduction along with minimum import price-based formulations, consistent with India's approach in other free trade agreements.
Tariff Rate Quotas for Highly Sensitive Items
Certain highly sensitive agricultural items have been liberalized under Tariff Rate Quotas (TRQs), a mechanism allowing limited quantities at reduced duty rates. Products falling under this category include in-shell almonds, walnuts, pistachios, and lentils.
India's Agricultural Trade Surplus with US
Government data reveals that India maintains a significant trade surplus of $1.3 billion in agricultural trade with the United States. In 2024, India exported $3.4 billion worth of agricultural products to the US while importing $2.1 billion, resulting in this favorable trade balance.
Ministerial Assurance on Reciprocal Tariffs
In an interview, Union Commerce Minister Piyush Goyal emphasized that Indian agricultural products would benefit from lower reciprocal tariffs compared to competitors, with several items enjoying zero tariff status.
"All our agricultural products now will have a lower reciprocal tariff than our competition at 18%. In addition, I'll read out some items where we reduced reciprocal tariffs to zero. As with tea and coffee, and their extracts, there'll be zero tariff. On spices, there'll be zero tariff. On coconut or coconut oil, there'll be zero tariffs. On vegetable wax, zero tariff," Goyal stated.
The minister further clarified on Saturday that "Agricultural products from Indian farmers will be exported to the United States at zero duty. At the same time, no tariff concessions have been granted for agricultural products from US farmers entering the Indian market."
Goyal provided categorical assurance regarding the agreement's impact on domestic stakeholders: "I can state categorically and without any hesitation that India's farmers, MSMEs, artisans, and craftsmen will not suffer any loss. On the contrary, India will benefit from greater access to the US market."
