India toughens stance on agri issues; trade talks with US enter crucial phase

India pushes back on US demands in last-minute trade negotiations

India has hardened its position on issues related to agriculture as negotiations with the US team in Washington have entered a crucial stage, an Indian top official said on Monday. The official also said that the stay of the Indian team, headed by special secretary in the Department of Commerce Rajesh Agrawal, is expected to be extended further.

The team is in Washington for negotiations on an interim trade agreement with the US. Both sides are rushing to close a deal ahead of the July 9 deadline for the full implementation of a 26 percent reciprocal tariff, which has been suspended since April. “If the proposed trade talks fail, the 26 percent tariffs will come into force again,” the official added.

The stay of the Indian officials has already been extended for three days until June 30. Initially, the delegation was scheduled to stay for two days, with the talks having commenced on June 26. Another official said that the commerce ministry has informed domestic exporters and industry that the talks are on for the first phase of the proposed bilateral trade agreement. There would be more phases.

These talks are significant as both countries are engaged in negotiations for an interim trade deal and are trying to finalize the pact before July 9, the deadline for the expiry of the suspensions of reciprocal tariffs imposed by the Donald Trump administration on April 2. On April 2, the US imposed an additional 26 percent reciprocal tariff on Indian goods but suspended it for 90 days. However, the 10 percent baseline tariff imposed by America remains in place. India is seeking full exemption from the additional 26 percent tariff.

The US is demanding duty concessions in both the agriculture and dairy sectors. But these segments are difficult and challenging areas for India to give duty concessions to the US, as Indian farmers are into sustenance farming and have small land holdings. Therefore, these sectors are politically very sensitive.

India has not opened up the dairy sector for any of its trading partners in any free trade pacts the country has signed so far. The US wants duty concessions on certain industrial goods, automobiles – especially electric vehicles, wines, petrochemical products, dairy, and agricultural items like apples, tree nuts, and genetically modified crops.

India is seeking duty concessions for labour-intensive sectors like textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas in the proposed trade pact. The two countries are also looking to conclude talks for the first tranche of the proposed bilateral trade agreement (BTA) by fall (September-October) this year. The pact is aimed at more than doubling bilateral trade to USD 500 billion by 2030 from the current USD 191 billion. Before the first tranche, they are trying for an interim trade pact.

The US team was here from June 5 to June 11 for the talks. The negotiations will continue both virtually and physically in the days to come. India’s merchandise exports to the US rose by 21.78 percent to USD 17.25 billion in April-May this fiscal, while imports rose by 25.8 percent to USD 8.87 billion.

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