Why India Rejects US Duty Concessions on Agri, Dairy, and GM Foods: An Explainer

As India and the United States negotiate a Bilateral Trade Agreement (BTA), India has firmly rejected US demands for duty concessions on agricultural products, dairy, and genetically modified (GM) foods. With President Donald Trump imposing a 25% tariff on Indian goods from August 7, 2025, tensions have escalated. Below is an explainer on India’s stance and the implications, based on ongoing trade dynamics.

What is the India-US Bilateral Trade Agreement (BTA)?

The BTA, under negotiation since March 2025, aims to boost bilateral trade from $191 billion in 2024 to $500 billion by 2030. Five rounds of talks have occurred, with the sixth scheduled for August 25, led by Assistant US Trade Representative Brendan Lynch. The agreement seeks to reduce or eliminate import duties, ease service trade norms, and enhance two-way investments for mutual benefit.

What Are the Key Demands in the BTA?

• US Demands: Duty concessions on industrial goods, electric vehicles, wines, petrochemicals, agricultural products (e.g., apples, tree nuts), dairy, and GM crops like maize and soybeans.
• India’s Demands: Removal of the 25% US tariff, reduced duties on steel and aluminum (50%), autos (25%), and labor-intensive sectors like textiles, gems and jewelry, leather, garments, plastics, chemicals, shrimp, oilseeds, grapes, and bananas.

What Tariffs Does the US Impose on Indian Goods?

India’s average import duty is 17%, compared to the US’s 3.3%. On April 2, 2025, the US announced a 26% duty (10% baseline + 16% reciprocal), with only the 10% baseline currently active. From August 7, a 25% tariff will replace it, raising duties significantly—e.g., textiles will face 31-34% instead of 16-19%. Goods in transit before August 7 (12:01 AM EDT) will incur a 10% tariff until October 5. Exemptions apply to pharmaceuticals, electronics, and energy products, sparing over half of India’s $86.5 billion exports to the US.

Also Read: India Grapples with 'CAP' Crisis: Congress Slams PM Modi Amid U.S. Tariff Hike

Why Won’t India Concede on Agriculture, Dairy, and GM Foods?

• Agriculture: With 700 million rural Indians dependent on farming, agriculture is a livelihood lifeline, not a corporate enterprise like in the US. Lowering tariffs risks flooding markets with cheap, subsidized US grains (e.g., maize, soybeans), especially during global price drops. India’s maize output is 42.3 million tonnes compared to the US’s 377.6 million, 94% of which is GM. Tariffs (15% up to 0.5 million tonnes, 50% beyond) protect small farmers and ensure food security in a geopolitically volatile world.
• Dairy: India, the world’s largest milk producer, employs 80 million small farmers. US dairy practices, including animal-derived feed, clash with India’s religious and cultural sensitivities, making duty concessions non-negotiable. India’s GM-free feed certification further restricts US dairy imports.
• GM Foods: Importing GM products like soybean meal or distillers dried grains with solubles (DDGS) could jeopardize India’s $10 billion agricultural exports to the EU, which enforces strict GM regulations. India prohibits GM soybean and de-oiled cake imports due to GM protein content, though GM soybean oil is allowed. A now-withdrawn NITI Aayog paper suggested importing GM maize for ethanol but faced backlash for threatening 24 million Indian farmers.

What’s the Impact of US Tariffs on India?

The 25% tariff affects $40-48 billion of India’s exports, including gems and jewelry ($12 billion), textiles ($10.3 billion), and chemicals ($2.34 billion). However, India’s $4 trillion economy and exemptions for pharmaceuticals and electronics mitigate the impact. India may impose retaliatory duties under WTO norms and is exploring markets like the EU and UAE to offset losses.

Why the Stalemate?

The US sees India’s high tariffs (39% average for agriculture) and non-tariff barriers as restrictive, while India views US demands as threatening its rural economy. Trump’s frustration, voiced on Truth Social, also stems from India’s Russian oil and arms purchases, though he hasn’t detailed an additional penalty. India insists on protecting farmers, citing US subsidies ($61,000 per farmer vs. India’s $282). A proposed GM-free self-certification for US exports and concessions on non-sensitive items like apples show India’s willingness to compromise, but agriculture and dairy remain “red lines.”

What’s Next?

With talks ongoing, India is pushing for a balanced deal, leveraging its trade surplus ($41.2 billion in 2024-25) and seeking exemptions for labor-intensive sectors. The August 25 talks will be critical, but India’s firm stance on agriculture, dairy, and GM foods signals no retreat, prioritizing 700 million farmers over US market access.

Also Read: India-US Trade Talks Conclude, Deal Hangs in Balance