During ongoing negotiations in Washington, the United States has formally requested that India reduce tariffs on American agricultural products from around 40% to just 5%, effectively a 35 percentage point cut. This demand comes as part of discussions aimed at reaching an interim bilateral trade deal by August 1
🌾 4 Key Implications
1️⃣ Agriculture is the major sticking point
Agriculture remains the most contentious sector, with India seeking to retain tariff flexibility to protect its 700 million-strong farming population. U.S. negotiators, however, want parity with their 5% average agri tariffs
2️⃣ Food security vs trade gains
Experts from the Global Trade Research Initiative (GTRI) warn that slashing tariffs could flood Indian markets with subsidized U.S. grains, risking food security, rural livelihoods, and price stability—especially during global price crashes
3️⃣ Partial tariff relief likely
Media reports suggest India may offer selective cuts, especially on almonds, dairy, and marine products, while retaining high duties (up to 70–80%) on staple crops like rice, wheat, and dairy to safeguard domestic farmers
4️⃣ Timeline tension ahead of deadline
With the July 9 deadline for tariff retaliation extended to August 1, negotiators are racing to reach a preliminary framework. But agriculture remains unresolved, and agreed tariffs on other sectors (textiles, pharmaceuticals, EV parts) may advance before core farm concessions are settled The Times of India.
🔭 What to Watch Next
- Scope of cuts: Will India select a few U.S. agri items for tariff cuts or propose broad reforms?
- Safeguards & sunset clauses: Will India demand automatic triggers or review clauses to protect farmers?
- Link to U.S. concessions: Any farm tariff cuts in India might be tied to U.S. easing of duties on labor-intensive Indian exports like textiles and footwear, and granting short-term visa and social security benefits for Indian workers.
- Global food market shifts: Watch how international bulk grain trends and U.S. subsidy stance shape the deal.
✅ Bottom Line
The U.S. demands a steep 35 percentage point cut in India’s average agri tariffs—a move that threatens to destabilize Indian farming unless safeguards are implemented. As talks unfold ahead of the August 1 deadline, agriculture remains the biggest hurdle in a broader deal aimed at boosting bilateral trade toward $500 billion by 2030.
