Ag Policy Blog

The U.S.-India bilateral trade agreement has the potential to boost some agricultural exports, though India also is holding a hard line on others.

The U.S. Trade Representative's Office has released a few details of the "framework for an Interim Agreement" as the deal with India was described.

USTR stated, "India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, including dried distillers' grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products."

USTR also added, "Recognizing the importance of working together to resolve long-standing concerns, India also agrees to address long-standing non-tariff barriers to the trade in U.S. food and agricultural products."

Despite having the world's largest population, India is only the 15th largest export market for U.S. agriculture, according to USDA, though sales to the country are growing.

The U.S. has seen a boost of agricultural exports to India over the past year. Through November, the U.S. exported $2.7 billion in agricultural products to India, up 34% from 2024 export totals. India, through November, exported $3.37 billion in agricultural products to the U.S., up just 4% from a year earlier. That narrowed the agricultural trade deficit from $1.3 billion down to roughly $670 million.

The BBC reported an Indian farm group warned the deal could lead to farmer protests similar to changes in farm laws in the country five or six years ago. The farm group Samyukt Kisan Morcha, "United Farmers Front," called for the resignation of the country's Commerce Minister Piyush Goyal and asked Prime Minister Narendra Modi not to sign the deal, BBC stated. Farm groups in India also have called for a nationwide protest on Feb. 12.

The brokerage house Systematix Research said the inclusion of agricultural and food items for reduced tariffs could lead to "domestic backlash" because it would undercut domestic prices for corn, soybeans dairy and nuts, BBC reported.

BBC also reported India did not offer any concessions on dairy, genetically modified products, meat or poultry.

Goyal said Sunday that sensitive sectors such as agriculture and dairy have been protected in the deal, according to the Times of India. When it comes to distillers dried grains (DDGs), Goyal said Indian farmers' concerns about imports are misplaced and that "India has only opened up a small window." The article suggested India was opening up about 500,000 metric tons (mt) of DDG imports. Still, Goyal said India has a huge demand for DDGs because of its growing livestock and poultry sectors.

Goyal later said in the article that meat, poultry, rice, wheat, sugar, all dairy items, all genetically modified products, soybeans and corn are protected. He suggested India would see more imports of soybean oil, tree nuts, and fresh fruits and vegetables such as apples. Goyal also said the agreement protects India's exports of fish and seafood items.

In other areas, India will commit to buy $500 billion of U.S. energy products, aircraft and aircraft parts, precious metals, technology productions and coking coal over the next five years. The U.S. and India will work together on technology such as data centers.

The U.S. will cut the 50% tariff on India and apply a reciprocal tariff rate of 18% on goods from India, though the U.S. will remove tariffs on generic pharmaceuticals, certain aircraft and aircraft parts from India. This still keeps tariffs on Indian products significantly higher than the 3.3% charged before Trump came into office.

The deal comes less than a week after India signed a long-awaited trade deal with the European Union that is expected to eliminate or reduce tariffs on 96.6% of traded goods by value. That deal excludes EU soybeans, beef, sugar, rice and dairy from tariff reductions.

The Cato Institute compared the deals signed by both the U.S. and the EU. Cato cited, "Although neither agreement's full text has been published, the available details strongly suggest the EU emerged with a more liberalizing, durable, and economically sound agreement."

Cato noted, "In short, the EU negotiated a broad, institutionalized framework for market integration. The United States appears to have secured a set of partial concessions whose real-world impact remains uncertain."

The EU eliminates tariffs on more than 90% of India's major trade products going into Europe. India eliminates tariffs on 93% of EU trade value. The EU would be allowed to export 250,000 vehicles into India with just a 10% tariff, Cato cited.

Times of India article: https://timesofindia.indiatimes.com/….

BBC article: https://www.bbc.com/….

Cato article: https://www.cato.org/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on social platform X @ChrisClaytonDTN

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on social platform X @ChrisClaytonDTN

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