India firm on agriculture as US trade discussions enter crucial stage

The ongoing in-person round of talks between New Delhi and Washington is crucial, considering that the end of the 90-day pause on the US's plan to impose country-specific reciprocal tariffs on July 9

India has hardened its stance on issues related to the ‘sensitive’ agriculture sector, as negotiations for a trade deal with the United States (US) have entered a critical phase, according to a person familiar with the development. 

However, if the discussions fail, New Delhi should be prepared to face a 26 per cent reciprocal tariff that the US plans to impose after July 9, the person cited above told Business Standard.

  “The US is also in the process of negotiating deals with other countries. If those deals materialise, India may lose its comparative tariff advantage vis-à-vis other countries,” the person said.

  A trade delegation from New Delhi, led by chief negotiator and special secretary in the department of commerce, Rajesh Agrawal, has been in Washington, DC since the end of last week to hold further discussions on a trade agreement. The negotiations are expected to continue for the next two to three days. The ongoing in-person talks are crucial, given that the 90-day pause on the US’s plan to impose country-specific reciprocal tariffs ends on July 9.

 

Both sides are aiming to finalise an ‘early tranche’ or the first part of a broader bilateral trade agreement (BTA), that was announced by Prime Minister Narendra Modi and US President Donald Trump in February.

  On April 2, the Trump administration had announced reciprocal tariffs, including a 26 per cent levy on Indian goods. It subsequently paused the implementation for 90 days to allow time for negotiations, while retaining a universal 10 per cent tariff on all countries. On Sunday, Trump indicated that he doesn’t plan to extend the 90-day pause beyond July 9. 

  As part of the deal, India has been pushing hard for the removal of reciprocal tariffs and for lower import duties on labour-intensive products, such as garments and leather goods. A top US priority is to persuade India to reduce tariffs in the farm sector, which is key point of contention.

  “We (India) are sticking to our stance on certain issues, including agriculture,” the person said.

  Finance Minister Nirmala Sitharaman has reiterated that agriculture and dairy remain major ‘red lines’ for India in its negotiations with the US. 

Last week, Trump indicated that a “very big” trade agreement with India may be signed soon. “We just signed (a trade deal) with China. We are not going to make deals with everybody… But we’re having some great deals. We have one coming up, maybe with India, a very big one, where we’re going to open up India,” he had said during a White House event on Thursday.   

Work in progress

  - Ongoing trade negotiations by the Indian delegation in the US may be extended for another two-three days

  - In-person round of talks is crucial as Washington’s July 9 reciprocal tariff deadline is a little over a week away

  - If US’ negotiations with other countries materialise, India may lose its comparative tariff advantage vis-à-vis other nations