US-India Trade Deal: Agriculture Remains a Hurdle

India and the United States are negotiating a trade agreement that would see the U.S. lower tariffs on Indian goods from 50% to 18%. In return, India would stop purchasing Russian oil and reduce its own trade barriers. While the broad strokes of the deal have been shared, specific details remain under wraps, particularly regarding the contentious issue of agricultural market access.

Key US Farm Exports Face a Closed Door

India is unlikely to reduce tariffs on major U.S. agricultural imports like corn, soybeans, and soymeal. The primary reason is the country's ban on genetically modified (GM) food crops, a standard for the vast majority of U.S. corn and soybean production. This fundamental difference severely limits the potential for American market penetration.

Furthermore, India’s import needs for these commodities are small compared to a country like China. India currently holds large domestic stockpiles of both corn and soymeal, which is used as animal feed. While it is the world's biggest importer of soyoil—sourcing mainly from Brazil, Argentina, and the U.S.—its purchases of raw soybeans are negligible.

Other key areas face similar resistance:

• Ethanol: India has sufficient domestic ethanol production from corn, rice, and sugarcane, making it improbable that it will agree to import U.S. ethanol or the corn needed to produce it.

• Dairy: The U.S. has pushed for greater access to India’s heavily protected dairy market. However, New Delhi is expected to keep this sector off-limits to protect the livelihoods of millions of small farmers. Indian officials point to the vast difference in scale, with the average Indian farmer owning just two to three animals compared to herds of hundreds in the United States.

Where India Might Offer Concessions

While core agricultural sectors are protected, India may be willing to lower trade barriers on a range of other products. These are typically items that do not directly threaten the income of a large number of Indian farmers.

Potential areas for concessions include:

• Almonds, walnuts, and pistachios

• Apples, pears, and berries

• Fruits and vegetables

• Wine and spirits

Since India is already dependent on imports for many of these premium goods, reducing tariffs would be an easier political move for Prime Minister Narendra Modi's government. A deal in these areas would also allow President Donald Trump's administration to claim a victory for American farmers by securing new market access.

The Political Power of India's Farmers

Agriculture is a deeply sensitive issue in India. Although the sector makes up just 15% of the country's nearly $4 trillion economy, it provides a livelihood for almost half of its 1.4 billion people.

Nearly 80% of farmers in India are smallholders who own two hectares of land or less, which limits their income potential. This massive population forms a powerful voting bloc that successive governments have been careful not to alienate.

Farmer advocacy groups are already mobilizing against the potential deal. The Samyukt Kisan Morcha, a coalition of farmers' organizations, and prominent leaders like Rakesh Tikait have begun to criticize the Modi government's trade negotiations with Washington, signaling the political challenges that lie ahead.