Syllabus: GS2/IR/GS3/Economy
Context
- Amid US Tariffs, Prime Minister Modi said that the government would never compromise the interests of India’s farmers, livestock rearers and fisherfolk.
Background
- Trade negotiations between India and the US have stalled, with the US (under Donald Trump administration) pressuring India to:
- Open its domestic market to American farm produce.
- Relax restrictions on certain imports.
- India’s hesitation stems from domestic livelihood concerns.
Major Concerns
- Agricultural Sector: US is pushing India for importing genetically modified (GM) soyabean and maize imports.
- Both crops are widely grown in India – on some 13 million and 12 million hectares respectively.
- India fears that it may cause domestic price crash and unfair competition since GM food crop cultivation is banned in India.
- This may also undermine India’s seed sovereignty and biosafety norms.
- Ethanol Imports: The US also wants India to allow imports of ethanol for use as bio-fuel.
- Currently, only ethanol produced from domestically grown sugarcane, maize, and rice is used for blending up to 20% with petrol.
- The import from the US may reduce demand for domestically produced ethanol and will ultimately hurt India’s sugarcane farmers.
- Dairy Sector: There is an opposition from the Indian dairy industry to the imports of milk powder, butter oil, and cheese under any free trade agreement, whether with the US, the European Union, New Zealand, or Australia.
- India levies 30% import duty on cheese, 40% on butter, and 60% on milk powder.
- There is also the requirement that all imported dairy products should be derived from animals not fed on any formulation produced from the internal organs, bone meal or tissues of animals.
- The US claims that this is premised purely on religious and cultural grounds.
- Fisheries Sector: India’s seafood exports to the US were valued at $2.48 billion in 2024, US is a major market, the latest tariff of 50% can hugely impact aqua farmers in states such as Andhra Pradesh, Gujarat, Odisha, and Tamil Nadu.
- This is more so when much lower tariffs of 10-20% have been put on competing countries such as Chile, Ecuador, Indonesia, and Vietnam.
India’s Stand
- Protection of Livelihoods: Safeguard interests of farmers, fisherfolk, and dairy producers from cheaper imports and price volatility.
- Food & Biosafety Norms: Maintain ban on GM food crop cultivation and imports in line with domestic regulations and consumer safety concerns.
- Cultural & Religious Considerations: Uphold restrictions on dairy imports from animals fed with animal-derived products.
- Self-Reliance in Key Commodities: Promote domestic ethanol production to support rural economy and avoid dependence on imports.
- Trade Balance Concerns: Resist tariff concessions in sensitive sectors where India is vulnerable to import surges.
Way Ahead
- Balanced Trade Negotiations: Engage in calibrated opening of markets, ensuring sensitive sectors like agriculture and dairy are protected while exploring concessions in less-sensitive areas.
- Diversification of Export Markets: India can try to reduce over-dependence on the US for seafood and other exports by tapping new markets in East Asia, Middle East, and Africa.
- Safeguard Livelihoods: Continue high import duties and non-tariff barriers for dairy and other vulnerable sectors until domestic producers are competitive.
Conclusion
- India–US trade negotiations remain stalled due to deep differences in sensitive sectors such as agriculture, dairy, ethanol, and fisheries.
- While India seeks to safeguard livelihoods, cultural norms, and food safety, the US pushes for greater market access.
- A balanced approach that protects domestic interests while expanding mutually beneficial trade avenues is essential for breaking the deadlock.
Source: IE
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