India gives far reaching commitments under India-US trade deal on agriculture, regulation, digital policy, security alignment, says GTRI analysis
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The interim Trade Agreement being worked out between the US and India will see the US ease its tariffs on Indian products, but will result in that country securing far-reaching commitments from India on agriculture, regulation, digital policy, security alignment, and large-scale purchasing concessions that go well beyond trade, says Delhi based think tank Global Trade Research Initiative (GTRI).
GTRI’s preliminary analysis of the joint statement on India-US interim trade deal issued by both countries early today states that the US has ‘traded relief from its unsustainable and illegal reciprocal tariffs for permanent market access gains in India’.
“More consequential are the non-tariff and strategic concessions embedded in the framework. India has agreed to align more closely with the US on economic security, potentially constraining its freedom to trade with third countries and tying its policies to US sanctions and geopolitical priorities. This will likely strain its relations with BRICs countries. Commitments on non-tariff barriers and standards risk subordinating India’s domestic regulatory regime—especially in agriculture, health, and digital trade—to U.S. preferences, mirroring one-sided concessions Washington has extracted from smaller economies like Malaysia’, GTRI notes.
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Ajay Srivastava, founder GTRI also states that India’s pledge to buy $500 billion worth of US goods over five years — more than doubling current imports — appears implausible, particularly since major purchases like aircraft are private sector decisions. “Aircraft purchases are presented as a major component of this commitment. At present, India operates around 200 Boeing aircraft. Even if India were to add another 200 Boeing aircraft over the next five years, at an estimated cost of $ 300 million per aircraft, the total value would be about $ 60 billion. Moreover, such purchasing decisions are made by private airlines, not by the government, further raising questions about the feasibility of meeting this commitment”, Srivastava explains.
In the joint statement issued early today, India had said it will reduce or eliminate its most favoured nation (MFN) tariffs on all US industrial goods and on many food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruits, soybean oil, wine and spirits, and other agricultural items.
Srivastava cautioned that if the tariff reductions on US fresh fruits include apples, oranges, soybean oil, etc, the government could face strong opposition from farmer groups. On tariff elimination on electronic components, smartphones, and solar panels, he said the decision could adversely affect domestic manufacturing of these products in the future.
Overall, the Interim Agreement marks a step toward a US–India Bilateral Trade Agreement, but most concessions flow from India to the US, GTRI analysis concludes.