US pushes India to buy $5-6 bn more farm goods to seal trade deal

The United States wants India to buy at least another $5 billion to $6 billion worth of American poultry and farm goods if New Delhi wants to win reinstatement of a key US trade concession, four sources familiar with the talks told Reuters.

US President Donald Trump cited trade barriers last year when removing India from its Generalized System of Preferences (GSP) programme that allowed zero tariffs on $5.6 billion of exports to the United States. In retaliation, India slapped higher tariffs on more than two dozens U.S. products.

Ahead of a Trump visit to New Delhi to meet Prime Minister Narendra Modi next month, negotiators on both sides are hammering out terms for a trade deal that would include New Delhi rolling back higher tariffs on some farm goods such as almonds, walnuts and apples, one of the sources said.

Both governments had hoped to work out a limited trade deal last year, but struggled to reach an agreement.

India's commerce ministry and the US Embassy in New Delhi did not respond to a request for comment. The office of the US Trade Representative did not immediately respond outside regular business hours.

While India has offered a partial relief on medical device price caps that have hurt American pharma giants and a roll back in tariffs on some US goods, Trump's team wants a sweetener of $5-6 billion in additional trade for US goods to restore GSP privileges, three of the sources said.

That demand was conveyed by the United States to India in late December, said two sources.

As part of the negotiation, the US wants India to increase imports of frozen poultry products, the first source said. The US has already been pushing India to cut the high import taxes on poultry products.

"The deal has to be agriculture focused, the US is putting a number on everything (if India wants GSP back)," said one of the sources.

The sources asked not to be named due to the sensitivity of the discussions.

Other than the agriculture sector, the United States could be swayed if some of that additional revenue goes to its energy sector, said one of the sources.

Indian oil minister Dharmendra Pradhan this week said India was looking forward to extending its energy cooperation with the United States and other countries, but didn't disclose any planned deals.

Trump is likely to visit India in late February, in what would be his first visit to the South Asian nation since he took office three years ago.