India seeks concessions on agri products in return for auto tariff cuts in trade deal with US

Agriculture is a sensitive sector for India.

India may agree to lower tariffs on automobiles if the US keeps key agricultural goods out of the negotiations for a trade deal between them, government officials told Moneycontrol. "Meetings between the finance, agriculture and commerce ministries are happening daily to align positions and finalise calculations. The government is fast-tracking trade negotiations, hoping to close the trade deal by August-September,” on of them said.

“Each ministry is submitting a calibrated list of items for exclusion and proposing phased tariff reductions spread over five to seven years. This will ensure adequate protection for our sensitive sectors such as key agricultural goods while allowing market access for others,” the person said.

India and the US are currently discussing the contours of a mutually beneficial bilateral trade agreement (BTA), which is part of a new goal—"Mission 500”—aiming to more than double trade between the two countries to $500 billion by 2030, as agreed during Prime Minister Narendra Modi’s visit to America on February 13.

“There will be no trade deal with the US if it is not a win-win. If they ask for agriculture, we will ask for peanut butter,” a second government official said, using an analogy.

The first official added that while the US has sought concessions in the automobile segment, India is working on a balanced offer, keeping in mind sectors that are important to the country.

Both nations are looking to agree on a first draft of a mutually beneficial, multi-sector BTA by this autumn.

“India is eyeing strategic leverage in talks related to agriculture for a trade deal with the US and is looking to seal the first tranche by August-September,” the first official said.

India's agricultural goods exports to the US stood at $6.04 billion in calendar year 2024.

Earlier, there had been indications that while the US wanted India to entirely eliminate import duties on cars through the proposed trade deal, India has agreed to reduce tariffs on certain US imports, such as apples, walnuts and cranberries.

Agriculture is a sensitive sector for India.

Not too long ago, in 2021, India dropped out of the Regional Comprehensive Economic Partnership (RCEP) free trade agreement involving the Association of Southeast Asian Nations, citing its negative effects on farmers and the dairy sector.

The US in a recent report noted flagged India’s high tariffs, singling out steeper duties levied by New Delhi on a wide range of US goods, including vegetable oils (as high as 45 percent); apples, corn, and motorcycles (50 percent); automobiles and flowers (60 percent); natural rubber (70 percent); coffee, raisins and walnuts (100 percent); and alcoholic beverages (150 percent).