Final Negotiations in India-US Trade Talks Pending as Agriculture and Dairy Issues Persist
India-US Trade: Negotiations for a Comprehensive Tariff Agreement
New Delhi is pushing for a “zero-for-zero” tariff arrangement, which entails the complete removal of tariffs on goods exchanged between India and the United States. However, Washington is reportedly keen on retaining a 10% tariff on products from India.
Current Status of Trade Talks
As Indian Commerce Minister Piyush Goyal engages in high-stakes discussions in Washington aimed at finalizing an eagerly awaited trade agreement, Jayant Dasgupta, a former Indian Ambassador to the WTO, has highlighted the key sensitive issues complicating progress, particularly in the agriculture and dairy sectors.
Challenges in Agriculture and Dairy Sectors
Dasgupta underscored that India’s steadfast stance against allowing standard US dairy products into its market is a significant roadblock. He stated, “We will not permit common products to enter,” while indicating that only “specialized types of cheese and other items” with minimal demand in India might be eligible for consideration. Furthermore, he reiterated India’s long-established opposition to genetically modified (GM) goods. Although imports of GM crops are off the negotiation table, a degree of flexibility for non-GM products may exist, contingent upon proper certification. Major crops like corn and soybeans are expected to maintain their high import tariffs unless the US consents to a tariff rate quota (TRQ) system, which would allow a limited volume of imports at lower tariffs.
India’s Tariff Proposal
New Delhi is advocating for a “zero-for-zero” exchange of tariffs, aiming for complete tariff removal on both sides’ goods. Yet, Washington is reportedly clinging to its position of keeping the 10% tariff on Indian imports. Dasgupta remarked that this scenario might still be advantageous for India, especially if rival exporters such as China or Vietnam face steeper duties in the US market. “Even a 10% tariff can work to India’s benefit,” he noted.
Outline of Trade Agreement Phases
India has proposed a phased strategy for its trade agreement: the Interim Agreement is anticipated by July 8, emphasizing certain sectors; followed by a Second Phase set for October 2025, which aims to encompass 19 additional sectors; and culminating in a Final Agreement that would necessitate approval from the US Congress, particularly if it involves reversing the tariffs put in place during the Trump administration. Nevertheless, Dasgupta asserts that a complete reversion to pre-Trump tariff levels seems improbable. “It’s likely that these tariffs will see reductions, but they won’t revert to the former Trump-era levels,” he commented.
Reason for Urgency in Negotiations
This urgency arises from a 26% reciprocal tariff slapped by the US on Indian products as of April 2, which has been temporarily suspended for 90 days, set to expire on July 9. India is pressing for full exemption from this tariff, striving for an “early harvest” deal to alleviate tensions and enhance bilateral trade.
Ongoing Negotiations
Commerce Minister Goyal has already conducted discussions with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer as both nations hasten to finalize an interim agreement.
