NEW DELHI: The government is ‘confident’ that the early tranche of the bilateral trade agreement (BTA) with the United States will be signed by the July 9 deadline, even as last-minute negotiations are under way to iron out certain critical differences in areas like agriculture, a top official told FE.
The government has, however, drawn a red line regarding the US’s tough posturing on gaining agricultural market access.
“We may have to make some compromises as in any bilateral deal, but not at the cost of our small and marginal farmers,” the source said, requesting anonymity.
The official added that the progress in the trade talks with the US has been cordial and progressing satisfactorily.
The US had announced additional tariffs of 26% on India on April 2, as part of a near-universal “reciprocal tariff” policy, but these have later been put on hold till July 9. Indian exports, however, attract dditional baseline tariff of 10% in exporters to the US, under the Trump 2.0 administration. The reciprocal tariffs may be implemented after July 9 by the US for all its trade partners with whom it fails to reach any trade agreement or understanding.
The US is asking for duty cuts by India in products like soya, corn, apple, tree nuts (pistachios and almonds) and dairy products. However, India traditionally resisted giving market access in these areas to free trade agreement (FTA) partners to protect the marginal farmers.
The average land holding size for small and marginal farmers in India is less than 2.7 acres, while the average farm size in the US is 466 acres (2024). The US has been one of the largest producers of soybean, maize and wheat in the world. In India, close to 46% of the population is engaged in agriculture and allied activities. In comparison, in the United States, less than 2% of the population is directly employed in agriculture, according to the American Farm Bureau Federation.
The US is also seeking access for its genetically modified (GM) products, which is also a bone of contention, as India has not yet allowed GM products in food items. In 2021, India had allowed the import of 1.2 million tonnes of GM soyameal for chicken feed on an exceptional basis due to high domestic feed prices.
Earlier this month, a Niti Aayog working paper titled ‘Promoting India-US agricultural trade under the new US trade regime’ suggested that India should allow soybean oil imports from the US to reduce trade imbalance. This decision to allow the import of soybean oil from the US would not hurt domestic production, as the country imports substantial quantities of cooking oils.
As India imports about 58% of its cooking oils (mostly palm, soybean and sunflower), the Niti Aayog paper has suggested that the government explore possibilities of importing GM soybean seed and process it for oil extraction at the coastal regions. The soybean oil can then be supplied to the domestic market. The soybean meal could then be exported, which would ensure that animal feed of GM origins would not enter the Indian market.
Source: The Financial Express
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