‘Adopt dual-track approach to…’: NITI Aayog has important suggestion on India-US trade deal
India-US trade deal: Following the US implementation of ‘reciprocal tariffs’, India ought to implement a two-pronged strategy, according to a NITI Aayog working paper. This involves reducing elevated tariffs on non-critical agricultural imports from the US, whilst tactically extending concessions in areas where domestic production falls short.The working paper, titled ‘Promoting India-US Agricultural Trade Under the New US Trade Regime’, emphasises that India’s agricultural industry requires protective measures to maintain stable prices for both producers and consumers, protecting them from significant international market fluctuations.“A dual-track approach is essential now. In the short term, India should consider to selectively reduce high tariffs on non-sensitive imports and negotiate non-tariff safeguards on vulnerable segments such as poultry,” states the paper.The analysis highlighted that the unexpected declaration of “reciprocal tariffs” and improved market accessibility for American exports following Donald Trump’s re-election as US President in January 2025 has created significant global economic uncertainty, particularly amongst US trading associates.The document proposed that India could tactically extend trade allowances in sectors where domestic production falls short, specifically in the domains of edible oils and nuts.Given India’s position as the world’s primary edible oil importer and America’s substantial surplus in genetically modified soybean production, the study indicated that India could extend certain import allowances for US soybean oil. This would address American requirements and decrease trade disparity whilst safeguarding domestic production.Additionally, the document advocated for India to seek enhanced access to American markets for its successful export commodities including shrimp, fish, spices, rice, tea, coffee and rubber. India currently generates approximately USD 5.75 billion yearly from agricultural exports to America. The study recommends incorporating duty exemptions or TRQs in trade discussions to expand this figure.In addition to strategic trade administration, India needs to implement medium-term structural modifications to enhance the international competitiveness of its agricultural sector.“This includes bridging the productivity gap by embracing appropriate technologies, market reforms, private sector participation, improvement in logistics and development of competitive value chains,” it said.The agricultural commerce between India and the US has shown notable alterations and consistent expansion over the past twenty years, indicating stronger bilateral economic relationships.An analysis of agricultural trade patterns between India and the US demonstrates that both nations are broadening their export offerings.Whilst conventional products like frozen shrimp, basmati rice and spices remain prominent exports, there has been a noticeable rise in exports of processed cereals and other value-enhanced products.Indian imports from the US primarily consist of premium products such as almonds, pistachios and walnuts.India continues to maintain a positive agricultural trade balance with the USA, which has grown progressively. Nevertheless, agriculture’s proportional significance in bilateral trade is declining.
