India firm on protecting farmers interests in trade pact with US

India is unlikely to open its agriculture sector to United States imports, citing concerns over farmer livelihoods, sources have told Business Today. However, India may consider reducing tariffs on cars, electronics, pharmaceuticals, medical devices and spirits like whiskey among others as part of a broader trade agreement with the world’s largest economy. 

A high-level meeting is scheduled this week at the Prime Minister’s Office (PMO) with officials from the Commerce Ministry, Ministry of External Affairs, Finance Ministry, and NITI Aayog scheduled to take stock of progress on trade negotiations with the United States of America among other issues.

Commerce and Industry Minister Piyush Goyal was in Washington last week for discussions with US officials, including US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick. The negotiations focused on finalizing a bilateral trade agreement aimed at expanding two-way trade beyond $500 billion by 2030. The talks are part of ongoing efforts to resolve tariff disputes and improve market access for both countries.

Government sources say India has reaffirmed its commitment to safeguarding the livelihoods of its farmers while engaging in constructive dialogue with the US India emphasized the importance of a balanced trade partnership and highlighted the need to protect its agricultural sector from potential disruptions. India has conveyed that any trade agreement must take into account the well-being of millions of farmers who form the backbone of the country’s economy.

India’s stance on trade barriers remains firm, as the government is working to reduce tariffs and non-tariff barriers in select sectors while protecting domestic interests. The Ministry of External Affairs confirmed that discussions are underway to enhance trade in goods and services through the upcoming Bilateral Trade Agreement.

The discussions also align with Prime Minister Narendra Modi’s visit to the United States on February 12-13, his first since Donald Trump’s return to office as President of the United States of America. Bilateral trade between India and the US reached a record $118.2 billion in the last financial year, making the US India's largest trading partner.

The negotiations come at a time when President Trump has continued to complain about India’s "massive tariffs," arguing that it has been difficult for American businesses to operate in the Indian market. "India charges us massive tariffs. Massive. You can't even sell anything in India... They have agreed, by the way, they want to cut their tariffs way down now because somebody is finally exposing them for what they have done," he said last week.

Currently, the US has a $45.6 billion trade deficit with India. According to WTO data, the US trade-weighted average tariff rate stands at 2.2 per cent, whereas India's average is 12 percent.

Last month, both nations agreed to finalize the first tranche of the Bilateral Trade Agreement by the end of this year, setting the foundation for further trade liberalization and policy alignment between the two economies. Sources also suggest that US tariffs on Chinese imports would be favourable for India as it would give a significant impetus to electronics production in the country.