India, US mini trade deal talks hit stalemate over agri, dairy, GM crops

Representative Photo

India has toughened its position on issues related to agriculture and dairy as negotiations in Washington entered a crucial stage, posing challenges on efforts to close a mini deal before July 9, a government official said on Monday.

The official added that the stay of the Indian team, headed by special secretary in the department of commerce Rajesh Agrawal, is expected to be extended further depending on whether the United States eases demands over market access to sensitive sectors.

Indian negotiators have already extended their stay for three days until June 30. Initially, the delegation was scheduled to hold talks for two days since they landed in the US on June 27.

This visit comes after India and US held a round of talks in New Delhi between June 5-10.

India has taken a strong stance against demands from the US seeking greater access for its agriculture, dairy goods as well as genetically modified (GM) crops. The official indicated that if America continues to press for these concessions, ongoing negotiations for a mini trade deal may collapse.

"India has clearly conveyed that it will not agree to sweeping entry for US farm and dairy products, especially in sensitive sectors. Both sides are scheduled to continue talks today, with India evaluating whether discussions should be extended based on Washington’s willingness to moderate its demands," this official said.

If the negotiations fail to reach a breakthrough, Indian exports could face a 26-percent reciprocal tariff from the US. To be sure, discussions are still underway to secure exemptions from these potential duties.

The US has also been reluctant to fully exempt India from Trump's steeper sectoral tariffs as well as on the baseline levy. It plans to impose 26 percent reciprocal tariffs on India, out of which a 10 percent baseline duty has already been implemented.

There is also a steep 50 percent sectoral levy on steel and aluminium, and a 25 percent duty on certain automobiles and auto parts.

India has been trying to negotiate a scaled-down version of the first tranche of a Bilateral Trade Agreement (BTA) with the US to ensure that it escapes the ire of US President Donald Trump's reciprocal tariffs, scheduled to be re-imposed from July 9.

The deadline for a more comprehensive BTA is Fall of this year.

The US president on April 2 had imposed reciprocal tariffs on select countries, but reversed his decision on April 9 for a blanket 10 percent duty on all imports entering American shores.

To be sure, India is still trying to get a deal before reciprocal tariffs kick in, however negotiators are looking to strike a more balanced trade agreement.

Trump and other US officials have indicated they expect to clinch trade deals with many other countries soon, including India.