MC EXCLUSIVE India may cut tariffs on few agri, dairy goods via BTA with US, but wheat, rice likely to be kept out

While the US is also pushing for lower duties on wheat and rice through the trade deal, India is unlikely to budge, sources said.

As India looks to fast-track negotiations for the proposed trade deal with theUS, New Delhi may be open to granting American goods greater access to traditionally sensitive sectors such as dairy and agriculture, Moneycontrol has learnt.

According to sources privy to the development, the government could lower customs duties on a few agricultural and dairy products, such as cattle feed, oats, maize and edible oils, through the proposed trade deal with the US.

While the US is also pushing for lower duties on wheat and rice, India is unlikely to budge, sources said.

Currently, the basic customs duty rate on cattle feed and oats is 15 percent; 50 percent on maize; and 20 percent on three major edible oils—palm, sunflower and soybean oils.

However, the government will remain cautious about granting access to some other major US farm and dairy goods, in line with India’s protective approach towards these sectors when negotiating trade deals with other nations, said an official.

In 2019, India had in fact dropped out of the Regional Comprehensive Economic Partnership (RCEP) free-trade agreement involving the Association of Southeast Asian Nations, citing its negative effects on local farmers and the dairy sector.

The bilateral trade agreement (BTA) between India and the US is part of a new goal—Mission 500—that aims to more than doubletrade between the two countries to $500 billion by 2030.

On April 29, India’s commerce ministry said New Delhi and the US are betting on opportunities for early mutual wins as both sides inch closer to finalising a multi-sector BTA by the autumn of 2025 with in-person sectoral-level engagements planned from the end of May.

On the same day, US President Donald Trump said that tariff talks with India were "going great" and suggested there was a possibility the two nations could soon reach a deal.

Experts say that while India should be more agreeable about lowering tariffs in sectors such as textiles, engineering products, electronics and pharmaceuticals, among other products, it needs to continue to be protective of agriculture, dairy and automobiles.

“India has an opportunity to gain access to the US market on a preferential basis in a number of sectors and hence should focus on improving its market presence in those sectors. India should look to bridge the trade gap by sourcing more products from the US, moving its sourcing of the identified products from other markets,” said Bipin Sapra, tax partner, EY India.

Sivakumar Ramjee, executive director of Andersen Group firm Nangia Andersen, too called for selective tariff reductions on non-sensitive products to navigate the complex negotiations with the US. "The US imposes significantly lower tariffs on agricultural goods, averaging just 5 percent, which has created a trade imbalance that the US is eager to address," said Ramjee.