Bilateral Trade Talks Accelerate as India Pushes to Protect Domestic Agriculture
India is intensifying efforts to finalize a trade agreement with the United States, aiming to conclude the first tranche of negotiations by August or September 2025, according to officials closely involved in the process. With high-stakes negotiations underway, New Delhi is proposing a strategic trade-off—offering tariff reductions on automobiles in return for exemptions on critical agricultural commodities. The move highlights India’s priority to shield its domestic farming sector, while still facilitating expanded trade under a balanced bilateral trade agreement (BTA).
Senior government officials revealed that daily coordination is ongoing among the finance, commerce, and agriculture ministries to align their positions and finalize tariff schedules. The ministries are developing phased reduction frameworks that spread concessions over five to seven years, ensuring sensitive sectors like agriculture receive adequate protection. “Each ministry is submitting a calibrated list of items for exclusion and proposing phased tariff reductions. This will ensure adequate protection for our sensitive sectors while allowing market access for others,” one official stated.
India’s focus on agriculture as a non-negotiable point is tied to the broader political and economic imperatives of protecting millions of domestic farmers. The government is taking a cautious approach in order to avoid a repeat of 2021, when it exited the Regional Comprehensive Economic Partnership (RCEP) due to concerns over its potential impact on rural livelihoods and the dairy sector.
Highlights:
India fast-tracking trade talks with US to conclude first tranche by August–September 2025.
Daily inter-ministerial meetings underway to finalize tariff reduction proposals.
Phased tariff cuts proposed to protect India’s agricultural interests.
Agriculture viewed as a red-line issue for India in ongoing negotiations.
Strategic Bargaining: Auto Tariff Reductions Offered for Agricultural Exemptions
While the United States has been pressing India to reduce or eliminate high tariffs on automobiles and related imports, Indian negotiators are using this demand as leverage to protect agricultural goods. The Indian government is adamant that any significant trade concession must be reciprocated by the exclusion of certain farm products from the negotiations. As one official put it, “If they ask for agriculture, we will ask for peanut butter,” signaling that India will not yield unilaterally on sectors deemed strategically vital.
The US has long criticized India’s protectionist tariff regime, citing import duties that remain among the highest in the world. Recent US trade assessments noted steep Indian tariffs on a range of American goods: 45% on vegetable oils, 50% on apples, corn, and motorcycles, 60% on automobiles and flowers, 70% on natural rubber, 100% on coffee, raisins, and walnuts, and 150% on alcoholic beverages. These figures underscore the challenge negotiators face in crafting a mutually acceptable trade package that both sides can present as a win domestically.
However, there are signs of flexibility. India has already moved to reduce tariffs on specific US agricultural imports like apples, walnuts, and cranberries. In return, India is negotiating to secure longer timelines and more favorable terms for any potential auto-related tariff reductions, particularly with a view to supporting its nascent electric vehicle (EV) industry and domestic manufacturing under the Make in India initiative.
Highlights:
India using US auto tariff demands as leverage to protect key agri sectors.
US critical of India’s high import duties, including 100–150% on many goods.
India already offered partial relief on items like apples and walnuts.
Negotiators targeting phased timelines for auto duty reductions.
Mission 500: Doubling India-US Trade to $500 Billion by 2030
The ongoing trade dialogue is part of a broader strategic initiative dubbed “Mission 500,” launched after Prime Minister Narendra Modi’s visit to Washington in February 2025. The mission aims to more than double bilateral trade volumes between India and the United States to $500 billion by the end of the decade. As the world’s two largest democracies seek to deepen economic ties amid shifting global trade dynamics, the BTA is seen as a key pillar in advancing shared commercial and geopolitical interests.
India’s agricultural exports to the US reached $6.04 billion in calendar year 2024, underscoring the sector’s growing contribution to bilateral trade. However, Indian officials remain cautious about opening this space to increased US competition, especially without adequate safeguards and transition periods. “India is eyeing strategic leverage in talks related to agriculture for a trade deal with the US and is looking to seal the first tranche by August-September,” one source emphasized.
In parallel, both countries are attempting to draft a multi-sector agreement that addresses critical sectors ranging from information technology and semiconductors to defense procurement and pharmaceuticals. While agriculture and automobiles are at the center of current talks, other sectors like e-commerce regulations, data localization, and medical device pricing are expected to feature in future negotiation rounds.
Highlights:
“Mission 500” aims to double bilateral trade to $500 billion by 2030.
India exported $6.04 billion worth of agri goods to US in 2024.
Officials planning phased and sector-specific negotiations.
Broader agreement expected to include IT, pharma, and e-commerce next.
