By Shailesh Yadav |
New Delhi [India], February 3 (ANI): India’s agricultural sensitivities have been fully protected in the India–US trade deal, under which American tariffs on Indian goods will be reduced to 18 per cent, a senior government official told ANI on Tuesday.
The official’s remarks come amid speculation that India may have offered agricultural market access concessions to secure the tariff reduction. The government, however, has followed a calibrated approach to agricultural imports that safeguards sensitive farm products while remaining consistent with India’s established Free Trade Agreement (FTA) template.
Only the least sensitive agricultural products—those that India routinely offers to all FTA partners, including under the UK FTA—will receive immediate zero-duty access, the official said.
Highlighting India’s strong position in agricultural trade, the official pointed out that the country enjoys a substantial surplus of USD 1.3 billion in agricultural trade with the United States. India exports agricultural products worth USD 3.4 billion to the US annually, while imports stand at just USD 2.1 billion, demonstrating the competitiveness of Indian agriculture in the American market.
“This deal will only strengthen our agricultural export position while protecting our sensitive sectors,” the official added.
While safeguarding agricultural interests, India has also secured significant market access for its employment-intensive export sectors that were facing punitive tariffs of up to 50 per cent. The textile and apparel sector, which exports over USD 10 billion worth of products to the US each year, will benefit substantially from the reduced 18 per cent tariff.
Other labour-intensive sectors, including leather and footwear, marine products, chemicals, plastics and rubber, home décor, carpets, machinery, and certain agricultural export products, are also expected to gain significantly.
“These products, which are employment-intensive and labour-intensive, were a key concern for us. They are now going to get the best rates,” the official said.
The agreement provides India with a strategic advantage over key competitors such as Vietnam, Indonesia, China, Malaysia, Thailand, Bangladesh, and Cambodia, all of which continue to face higher US tariffs.
“India will have a clear advantage with lower tariffs compared to our competitor countries,” the official noted, adding that this differential treatment is expected to enhance India’s manufacturing competitiveness and potentially divert investments from higher-tariff jurisdictions.
In addition to the general tariff reductions, the United States has fully withdrawn the 25 per cent tariff it had imposed on India’s crude oil purchases from Russia.
Officials said the timing of the announcement is particularly favourable. Despite earlier tariff threats, Indian exports had remained stable due to existing contracts, replacement orders, and inventory building.
“With this announcement, all these contracts will now get a new lease of life,” a source said, indicating sustained and possibly expanded export momentum.
India has also agreed to reduce automobile duties, but only for higher-end vehicles, thereby protecting domestic automobile manufacturing while addressing demand in the premium car segment.
The trade understanding includes India’s commitment to purchase USD 500 billion worth of American products over five years. These purchases will be focused on oil and LNG, aircraft and aircraft parts, precious metals and diamonds, and high-technology products such as semiconductor chips, data centres, and servers.
While an understanding has been reached, the official clarified that implementation will proceed in phases. A joint statement will first outline the contours of the agreement and capture the understanding on all key aspects.
“The joint statement will be followed by an exhaustive legal agreement detailing all aspects of the trade deal,” the official said. “This will culminate in the signing of the first phase of the agreement.”
Commerce and Industry Minister Piyush Goyal, addressing a press conference on Tuesday, said Prime Minister Narendra Modi has consistently championed the agriculture and dairy sectors and ensured their interests are safeguarded.
He reiterated that the sensitive sectors of India’s economy, particularly agriculture and dairy, have been fully protected in the India–US trade deal.
“PM Modi has always championed both the agriculture and dairy sectors, safeguarding their interests and working tirelessly to ensure a bright future and ample opportunities for people in these sectors,” Goyal said.
“I am pleased that the entire country understands and appreciates this. The sensitive factors of India’s economy, particularly agriculture and dairy, have been protected,” he added.
The Minister further said that MSMEs, the engineering sector, and industries such as textiles, gems and jewellery, leather goods, and marine products would gain numerous opportunities from the agreement.
“We are seeing widespread enthusiasm across the country,” Goyal said. “Exporters, the technology sector, those looking to integrate into global supply chains and value chains, those establishing global capability centres, and investors in labour-intensive sectors that generate employment for millions—all are excited by this development,” he added. (ANI)
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