India's agricultural and dairy sectors will see shifts in import policies following an interim trade agreement with the United States. While concessions have been made on certain products, officials state that sensitive domestic sectors remain protected.
Contextual Overview
India and the United States have finalized a framework for an interim trade agreement, with significant implications for agricultural and dairy trade between the two nations. This agreement, announced on February 7, 2026, aims to reduce tariffs and non-tariff barriers, potentially altering trade flows.
Timeline: Negotiations have culminated in an interim agreement framework.
Actors: Key figures include India's Union Commerce and Industry Minister Piyush Goyal, Union Agriculture Minister Shivraj Singh Chouhan, and former US President Donald Trump.
Key Developments: India has agreed to eliminate or reduce tariffs on a range of US agricultural products. Simultaneously, the US has agreed to reduce its reciprocal tariffs on Indian goods.
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"India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products." - Joint Statement
Agreements on Agricultural and Dairy Imports
India's agreement involves the reduction or elimination of tariffs on specific US agricultural exports. This move is framed as addressing long-standing non-tariff barriers that affected US food and agricultural trade.
Products Subject to Tariff Reductions/Elimination:
Dried Distillers' Grains (DDGs) for animal feed.
Red sorghum for animal feed.
Tree nuts, including American almonds, pistachios, and walnuts.
Fresh and processed fruits, such as apples.
Soybean oil.
Wine and spirits.
Rationale for Selectivity: Officials state that tariff reductions were primarily extended to products that India either does not produce or does not produce in sufficient quantities to meet demand. This approach is intended to mitigate direct impact on domestic farmers.
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"The import concessions that India has given on other agricultural products may not impact its farmers much." - The Indian Express
Protection of Sensitive Domestic Sectors
Despite concessions on specific items, Indian officials emphasize that core agricultural and dairy products remain protected from tariff changes.
Shielded Products:
Key staples like maize, wheat, rice, and soya.
Dairy products, including milk and cheese.
Poultry and certain meat products.
Ethanol (for fuel blending).
Tobacco.
Safeguard Mechanisms: These products are explicitly excluded from tariff concessions, ensuring continued protection for domestic farmers, food security, and rural livelihoods.
"Key staples and sensitive farm and dairy products have been fully protected from tariff concessions." - The Tribune
Potential for Genetically Modified (GM) Product Imports
Concerns have been raised regarding the potential entry of genetically modified (GM) products, particularly in animal feed.
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Animal Feed Imports: India has agreed to import DDGs and red sorghum for animal feed.
DDGs are often derived from GM corn.
Officials state that processing eliminates GM characteristics in DDGs.
Soybean and Maize: India has not permitted imports of GM soybean and maize, which are significant US agricultural exports.
However, soybean oil imports will be allowed.
Concerns persist among some farm organizations about the impact of soybean oil imports on domestic farmers.
"Farm organisations say DDG comes from GM corn and questioned allowing import of soybean oil. The import of soyabean oil will adversely impact millions of soyabean farmers, they said." - The Times of India
Impact on Bilateral Trade
The agreement is expected to influence trade balances and offer benefits to various sectors in both countries.
Trade Deficit with US: India anticipates a trade deficit with the US from next year. In FY25, US imports into India were $48 billion, while exports to the US were $86.5 billion.
Benefits for Indian Exports: Reduced tariffs in the US are expected to boost Indian exports, particularly in labor-intensive sectors like textiles, leather, and handicrafts.
US Agricultural Market Access: The agreement grants US agricultural exports greater access to the Indian market for specific product categories.
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"India’s merchandise exports to the US rose from $77.52 billion in FY24 to $86.51 billion in FY25, while imports increased from $42.20 billion to $45.63 billion, expanding total bilateral trade to $132.14 billion, as per official data." - Business Standard
Expert and Official Commentary
Government officials have described the agreement as fair and balanced, while industry observers provide context on its implications.
Official Stance:
Piyush Goyal stated that the agreement is "fair, equitable and balanced" and that India has safeguarded its agriculture and dairy sectors.
Shivraj Singh Chouhan asserted that no clause allows GM imports or farm concessions on sensitive crops.
Analyst Perspective:
Bipin Sapra, Partner and Indirect Tax Policy Leader, EY India, noted that India secured market access for its products while agreeing to lower non-tariff barriers.
"We have protected their interests… India has given selective concessions on the agricultural side, agreed for purchase of energy products and agreed to lower non-tariff barriers, a US demand for a long time and has in turn secured market access and preferential treatment for the majority of its products including textiles and pharmaceuticals." - Bipin Sapra, EY India
Conclusion and Next Steps
The interim trade agreement between India and the United States represents a recalibration of trade policies for specific agricultural and dairy products. While certain US imports will see reduced tariffs and non-tariff barriers, the government maintains that sensitive domestic sectors, including major staples and dairy, are insulated from adverse impacts. The long-term effects on India's agricultural economy and farmer incomes will depend on the implementation of these measures and ongoing market dynamics. Further details of the comprehensive Bilateral Trade Agreement (BTA) are expected to address broader agricultural market access issues.
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Deccan Chronicle: India To Have Trade Deficit With US From Next Year; To Remove Non-Tariff Barriers On Agri Imports
The Times of India: India stands its ground on dairy, agri products
The Tribune: India to eliminate tariffs on wide range of US agricultural products: Joint Statement*
The Tribune: Nod to select imports; core agri, dairy sectors shielded*
The Indian Express: What India has really given on agriculture in India-US trade deal*
Republic World: How India-US Interim Trade Deal Will Benefit Agriculture Sector: Boost to Exports, Farmers’ Income and Agri-Tech Investment*
The Hindu: India to lower duties on all U.S. industrial goods, many agri products; secures various tariff commitments*
Mint: India-US trade deal opens zero-duty window for exports worth $44 bn in first phase of pact*
The Financial Express: No concession for GM agri-products imports, may hits domestic soybean farmers income*
Down To Earth: India-US trade deal: Centre says agriculture and dairy protected, but lack of text fuels uncertainty*
The Financial Express: India-US trade deal: US gains farm market access but some items are off limits*
Hindustan Times: India-US trade deal highlights: Goyal calls India-US trade deal ‘fair, equitable and balanced’, lists zero-duty items*
The Hindu: India-U.S. trade deal will not include sensitive agricultural items and dairy: Goyal*
The Times of India: India-US trade deal: Farmers question import of animal feed, soybean oil*
Times Now: Explained: Why Agriculture and Dairy Remained Non-Negotiable for India in US Trade Deal*
India Today: No saudebaazi: Shivraj Chouhan dismisses Congress's claim on India-US trade deal*
The Indian Express: US farm exports to India have been surging even with no trade deal*
Mint: India-US deal to include ‘zero’ tariffs on ‘vast’ agricultural goods? Jamieson Greer reveals details*
The Hindu BusinessLine: India, US agree on interim trade pact framework slashing tariffs on Indian goods to 18%*
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