Agriculture, dairy shielded in India-US deal; trade pact in weeks

NEW DELHI: A day after announcements by PM Modi and US President Donald Trump that the two sides had reached a trade agreement, the govt asserted that sensitive sectors such as agriculture and dairy have been protected and labour-intensive sectors such as textiles, leather, marine products and gems & jewellery stand to benefit from the deal, which is expected to be finalised in the coming weeks.

“We all know how PM Modi is worried about the interests of our farmers, those in animal husbandry and dairy, and has always secured their interest. He has never allowed their interests to be compromised… even in the US trade deal, India’s sensitive sectors, agriculture and dairy, have been protected,” commerce minister Piyush Goyal said.


As a result, cereals, maize, soybean and genetically modified food may be kept out of the bilateral trade agreement, which has been in the works since last Feb.

Goyal said that Modi had managed to secure a very good deal for India, which was better than what US had offered to some other competing countries. Indian and American officials are currently engaged in drafting a joint statement which is expected to be finalised in the next few days.

Late Monday, Trump and Modi had announced that a deal had been finalised and tariffs on Indian imports will be slashed from 50% to 18%. Trump had gone on to claim that India will import oil, coal, technology and farm products to the tune of $500 billion from the US. The numbers came as a surprise given that in 2024-25, India’s overall goods imports added up to $721 billion.

People familiar with the discussions said that goods imports from the US are projected at $100 billion annually over the next five years, compared with $46 billion last year. Some tariff concessions to the US will be phased over a period of time, with some items likely to be allowed through import quotas, as is the case under the recent FTAs with the EU, New Zealand and the UK.
India expected to hike imports of oil, high-tech goods from US

India had come under pressure from Trump administration to open up its dairy and agriculture sectors by reducing duty. Modi govt didn’t agree, and Goyal’s statement suggests India managed to persuade the US negotiators not to let this become an obstacle.

Going forward, India is expected to step up imports of oil, LNG, high-value chips, equipment for data centres, aircraft and its components and nuclear equipment, some of which were allowed to be imported duty free in Budget. Given India’s demand for coking coal, chips and aircraft, some of the imports are already taking place, with some substitution likely.

In return, lower duty access to US for Indian goods will help labour-intensive sectors and MSMEs, which had been impacted by steep tariffs imposed by Trump last Aug.

“So, actually our exports will pick up now, that is my expectation... along with having found new markets where they will continue to be sold,” FM Nirmala said.