US–India Trade Deal Negotiations: Agricultural Fault Lines and Pathways to Deeper Cooperation

Trade conversations between the United States and India often focus on tariffs and technicalities, but the two giant trading partners share a much larger concern. This is especially true in agriculture.

Illustration by The Geostrata

The US relies on large, export-oriented farms, whereas India’s agricultural sector is composed of millions of small farmers who require steady prices to survive. What looks like a policy conversation on paper becomes an argument about defending two starkly different food systems.

THE RISE OF A STRATEGIC PARTNERSHIP

Both countries have sought in the last decade to enhance their economic relationship as part of their broader Indo-Pacific objectives. There is already over  $200 billion in goods and services traded, making India one of America’s largest partners outside the OECD.

On agriculture, however, it is a difficult area in which progress is slow.

In the US, big farming interests dominate policy-making. Rural voters are a driving force in Indian election results. This makes arm-twisting over farm trade-offs much more difficult.

CORE POINTS OF CONTENTION IN THE NEGOTIATION

Dairy Market Access: Dairy has become one of the most sensitive issues. India is viewed by American producers as a crucial market for cheese, whey and specialised dairy products. But the Indian dairy industry is dependent on millions of small farmers, who are organised into collective systems like Amul.

Even a relatively small influx of cheap imports could depress local prices and challenge the incomes of many rural families. For Indian policymakers, this sector is non-negotiable.

Genetically Modified Crops and Seed Imports: Genetically modified (GM) crops  are also a point of contention. While the US is one of the biggest GM soya and corn exporters (mainly meant for animal feed), India has been extremely cautious due to public resistance, environmental apprehensions and seed sovereignty concerns.

Even when imports are not meant for human consumption, the political backlash leaves American exporters with uncertainty.

Tariff Structure and Agricultural Support Policies: India’s tariff structure further complicates this equation. Duties on nuts, fruits, pulses  (lentils and the like), ethanol and processed foods are still high to safeguard farmers and prevent sharp food price spikes.

The US views this as an unfair practice. Ethanol is the classic case: Washington seeks to export its product to India’s expanding fuel-blend market, but India’s ethanol policy is heavily correlated with sugarcane pricing and rural income support. Altering one element could destabilise several others. 

SPS (Sanitary and Phytosanitary) Measures: Beyond tariffs, SPS standards are a silent source of friction. U.S. exporters frequently complain about India’s testing and certification requirements, which they say are arbitrary, while India insists that such measures protect consumer safety. Without a more explicit agreement, small deals can get bogged down in procedural roadblocks.

WHY AGRICULTURE BECOMES A POLITICAL AND SOCIAL BATTLEGROUND

Agriculture is at the centre of these disputes, due to the significant role agriculture plays in both countries.

US farms depend heavily on sales abroad. In India, where more than 40 per cent of the population was working in agriculture in 2019, even small fluctuations in price can bring big worries.

A proposal that one country finds acceptable can just as easily be perceived as a threat to the stability of rural areas in the other.

EMERGING AVENUES FOR CONSTRUCTIVE COOPERATION

Nevertheless, there is room for cooperation in spite of these difficulties. Slow, product-targeted entry to the market could provide a controlled opening that will not destroy India’s farming system.

Joint investments in cold-chain infrastructure, post-harvest technologies and logistics could enable India to minimise its considerable food losses and offer a significant opportunity for American businesses.

A transparent, predictable and science-based procedure for the assessment of GM feed imports would enable safety. Better coordination on testing and certification could assuage tensions more.

TOWARDS A COOPERATIVE, FUTURE-ORIENTED PARTNERSHIP

Any meaningful reform must have protection for small farmers. Booming cooperatives, insurance programs and training can help rural communities with this changing their market conditions. Without these safeguards, policy could become very unsustainable politically over a period of time.

The real openings for the future lie beyond trade in the traditional sense. Both countries are coping with climate pressures, water scarcity and growing demand for food.

Collaborative studies on climate-resilient crops, soil health, water-efficient farming and sustainable supply chains could make this partnership a torchbearer in agricultural innovation.

Agriculture is a contentious issue. The US sees India as an important market for its exporters, and farming is the lifeline of millions of people in India.

Real progress will depend on a balance of openness and protection through phased access, clear rules, science-based decisions, enhanced infrastructure and protection for vulnerable communities.

Unless these challenges are critically and transparently addressed, agricultural collaboration attempts could entrench vulnerabilities and ultimately defeat their intended purpose of promoting sustainability; consequently leading towards failure to develop a genuinely fair and transformative model globally.

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BY ISHITA SHARMA

TEAM GEOSTRATA

info@thegeostrata.com