US-India trade deal: GM corn, soya and walnuts expected to be top points of negotiation

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As India negotiates a bilateral trade deal with the US to shield itself from the risk of high tariffs, experts believe Washington will insist on New Delhi allowing imports of genetically modified (GM) corn and soya, and push for lower duty on walnuts.

“The US should be pushing hard for India to allow import of GM corn and soya, especially corn. They would also like lower duty on nuts. India first needs to decide if it would allow import of GM. It would be a big thing if India does that,” said Siraj Hussain, former Agriculture Secretary told Moneycontrol.

Allowing imports of corn could also prove beneficial to India as the country plans to increase ethanol blending in petrol and the government pushing for grain-based ethanol production.

India, however, has been reluctant to include GM crops in the country’s agriculture ecosystem. Currently, bt cotton is the only GM crop allowed for commercial cultivation and import.

India had a trade surplus with the US of $3.46 billion in agriculture in 2023. The key exports to the US included frozen shrimp and prawns, basmati and non-basmati rice, vegetable saps and extracts, natural honey, and processed food products, according to a report by the Indian Council for International Economic Relations.

India’s Commerce and Industry Minister, Piyush Goyal, was in Washington on May 17, with a team of officials, to further discuss the details of the bilateral trade deal with the US, that is expected before July 8.

“The trade deal is still under negotiation. For India, agriculture is very sensitive. GM soya and corn are big ticket items for the US. They would be pressing us (India) for that. Also milk, walnuts and berries,” Ashok Gulati, agricultural economist and former chairman, Commission for Agricultural Costs and Prices, told Moneycontrol.

“The US is our largest trading partner and their purpose is to reduce trade deficit. Agriculture would be towards the end (in negotiations), majority discussion would be on industrial goods,” added Gulati.

While lowering duties on certain farm commodities would favour New Delhi, protecting employment-sensitive sectors such as dairy and poultry is also expected to be high on the government’s priority list.

“India didn’t allow dairy even to Australia. US does not have surplus of dairy, so they may not even push for dairy,” said Hussain.

On May 6, India signed a Free Trade Agreement (FTA) with the United Kingdom, excluding sensitive items like dairy products, apples and cheese among others.

India imposes higher tariffs on agricultural products to protect the sector as the country’s farm and allied sectors employ 46 percent of the population.

The simple average tariff for agricultural goods in India is 39 percent, starkly higher than the US rate of 5 percent, which remains a significant concern for the Trump administration.