US puts hard terms on table, presents a take-it-or-leave-it offer; demands access to agriculture, dairy, pharma

A US team led by Brendan Lynch, Assistant US Trade Representative for South and Central Asia, was in New Delhi for the face-to-face bilateral talks from 4 June to 10 June. While half of the team has returned, the rest in New Delhi have sought definitive commitments on market access in sensitive areas, the people cited above said on the condition of anonymity.

The talks will continue virtually to seal the deal.

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India has traditionally resisted opening these areas due to concerns over unregulated competition and social sensitivities. Indian negotiators now navigate political and economic complexities related to sectors vital to rural livelihoods and food security, amid the hardened US stance.

“The negotiations are not progressing as expected. The talks were meant to be two-way, as agreed. However, the US team’s insistence on opening certain critical sectors comes across as a take-it-or-leave-it offer," said the first among the three people cited above.

Queries emailed to the spokespersons of US Secretary of Commerce, USTR and US Embassy in New Delhi, along with spokespersons of ministries of commerce and external affairs remained unanswered.

Two-way road

Mint reported on 21 April that Indian negotiators have made it clear that unless the US changes its animal feeding practices—specifically the use of non-vegetarian feed for cattle—or adopts India’s vegetarian certification process, US dairy products such as cheese and butter won't be allowed in. At the same time, India has conveyed its willingness to consider tariff concessions on certain nuts and fruits.

Tying up a Bilateral Trade Agreement (BTA) by 9 July is critical to stop the 10% universal tariff and the additional 16% country-specific US tariffs. According to the second person cited above, the Indian side views the US insistence as a breach of the 13 February joint statement issued by both leaderships to negotiate a mutually beneficial BTA by fall 2025.

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The US wants India to significantly reduce duties on American agricultural goods, dairy products, and shrimp, as well as to remove non-tariff barriers that currently restrict US dairy exports, all without offering substantial market access to Indian goods in return, the officials cited above said.

India still sees hope, with about a month remaining before the 90-day pause on Trump’s reciprocal tariff ends on 8 July, to finalize the first tranche of the deal. “It’s not that it can’t be done—it’s possible, as both countries are in favour of it. In fact, India was the first country to be offered a trade agreement. We are trying our best to make it happen and keep the trade dialogue on track," said the third person.

However, this person denied that changing geopolitical situations were affecting the ongoing BTA talks, citing recent developments where the US successfully concluded trade agreements with the UK and China as evidence.

For an open market

A Niti Aayog working paper last month suggested that India open its market to a broad range of US agricultural products, including rice, pepper, soybean oil, shrimp, tea, coffee, dairy and poultry under the BTA. However, these recommendations ignore risks to India’s 700 million farm-dependent citizens, according to the Global Trade Research Initiative (GTRI), a thinktank. Co-founder Ajay Srivastava has called for a broader public consultation on these recommendations.

Meanwhile, Indian negotiators have raised concerns over stringent US sanitary and phytosanitary norms, drug regulations, and provisions such as the destruction of entire consignments of fruits if even a few units fail to meet prescribed standards. These are viewed as excessively harsh and trade-restrictive.

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At present, India imposes a basic customs duty of ₹35 per kg on shelled almonds, ₹100 per kg on in-shell almonds, along with a 10% Agriculture Infrastructure Development Cess. Walnuts—both in-shell and shelled—attract a 100% duty when imported from the US, while pistachios face a 10% duty calculated on the cost, insurance, and freight (CIF) value.

In 2024, US exports of agricultural and allied products to India stood at nearly $2 billion, including $452 million worth of alcoholic beverages and $1.3 billion worth of fruits and vegetables. In comparison, India’s total agricultural exports to the US in FY24 were valued at $2.12 billion.

Sharp asymmetry

Tariff comparisons show a sharp asymmetry. India imposes an average tariff of 37.66% on US agriculture, meat, while US tariffs on Indian goods in the same category stand at just 5.29%. In the chemicals and pharmaceuticals sector, US goods face a 9.68% duty in India, whereas Indian products are subject to only 1.06% in the US.

Dairy products from the US attract a high duty of 28.42% in India, while Indian dairy exports to the US face a minimal 0.59% tariff. Similarly, US processed food, sugar, cocoa, and related preparations are subject to a 29.66% duty in India, compared to just 4.67% for Indian goods of the same categories in the US.

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On cereals, vegetables, fruits, and spices, US exports to India are taxed at an average rate of 8.82%, while Indian products in these categories face only 3.1% in the US. For pharmaceuticals, US exports to India face a 10.91% duty, whereas Indian pharma products exported to the US attract a negligible 0.01% tariff.

After UK's industries faced American tariffs of 25% on all aluminium, steel and derivatives (announced on 12 March), 25% tariff on passenger vehicles (announced on 3 April ), 25% tariff on automobile parts (beginning 3 May ), and a 10% baseline tariff on all imports (from 5 April) – the UK and the US on 8 May announced an economic prosperity deal (EPD). The mini deal secured some concessions for the UK, but the 10% baseline tariff continued.