A senior government official told ANI on Tuesday that “India’s agricultural sensitivities have been fully protected” in the India-US trade deal, under which US tariffs on Indian goods will be reduced to 18%. The official’s comments come amid speculation about agricultural market access concessions that India may have offered to get the duty cuts.
The Government has adopted an approach to agricultural imports that ensures the safety of sensitive agricultural products while also remaining in line with India’s established Free Trade Agreements (FTAs).
Only the least sensitive agricultural products – products that India regularly provides to all FTA partners, including the UK FTA – will receive immediate zero-duty access. Underscoring India’s strong position in agricultural trade, the official pointed out that India enjoys a substantial surplus of US$1.3 billion in agricultural trade with the United States.
India exports agricultural products worth US$3.4 billion to the US annually, while imports only US$2.1 billion, which shows the competitiveness of Indian agriculture in the US market. “This agreement will further strengthen our agricultural export position while protecting our sensitive sectors,” the official further said.
Keeping in mind agricultural sensitivities, India has gained significant market access for its employment-intensive export sectors, which were facing punitive 50% tariffs. The textile and apparel industry, which exports products worth over US$10 billion annually to the US, will benefit from the reduced tariff rate of 18 per cent. Other labor-intensive sectors, including leather and footwear, marine products, chemicals, plastics and rubber, home furnishings, carpets, machinery and some agricultural export products, will also benefit significantly.
The agreement gives India a strategic edge over key competitors including Vietnam, Indonesia, China, Malaysia, Thailand, Bangladesh and Cambodia, all of which face far higher tariffs than those imposed by the US. “India will have a clear advantage due to lower tariffs compared to competing countries,” the official said, adding that this differential treatment will boost India’s manufacturing competitiveness and potentially attract investment from regions with higher tariffs.
In addition to the general duty cuts, the US has completely withdrawn the 25% duty imposed on crude oil purchased by India from Russia. Officials stressed that the timing of this announcement is particularly opportune. Despite earlier tariff threats, Indian exports remained stable due to existing contracts, replacement orders and stock build-up.
“With this announcement, all these contracts will now get a new lease of life,” a source said, indicating continued and potentially expanded export momentum. India has agreed to reduce automobile duty, but only for high-end vehicles, thereby preserving the domestic automobile manufacturing sector while catering to the premium car market.
The trade agreement includes a commitment by India to purchase US products worth US$500 billion over five years, primarily focused on oil and LNG, aircraft and aircraft parts, precious metals and diamonds, and high-tech products including semiconductor chips, data centers and servers.
Although an agreement has been reached, the official clarified that the process will proceed in a phased manner. First, a joint statement will be issued outlining the framework of the agreement and covering all key aspects agreed upon. “The joint statement will be followed by a detailed legal agreement giving all the details related to the trade agreement. This will be followed by the signing of the first phase of the trade agreement,” the official said.
Addressing a press conference on Tuesday, Commerce and Industry Minister Piyush Goyal said that Prime Minister Narendra Modi has always supported the agriculture and dairy sectors, protecting their interests and he also said that sensitive factors of India’s economy, especially agriculture and dairy, have been protected in the India-US trade agreement.
He said that there will be many opportunities for small and medium enterprises (MSMEs), the engineering sector of the country and sectors like textiles, gems and jewellery, leather goods and marine goods. The Minister said that the trade agreement has protected the sensitive factors of India’s economy, especially agriculture and dairy industry.
“Prime Minister Modi has always supported the agriculture and dairy sectors, protected their interests and worked tirelessly to ensure a bright future and ample opportunities for the people of this sector. I am glad that the entire country understands and appreciates this, and this resonates deeply in the hearts of the people. The sensitive factors of India’s economy, especially the agriculture and dairy sectors, have been kept safe,” he said.
“We have received reports from across the country; there is an atmosphere of excitement everywhere. Everyone associated with India’s exports, people associated with India’s technology sector, those who want to bring modern technology to India or want to be part of global supply chains and global value chains, those who want to set up global capability centres, and those who want to invest in various sectors, especially in labour-intensive sectors that provide employment to millions of people, are all excited about it,” he said.