India Seeks Protection for Agriculture in Exchange for Auto Tariff Cuts in US Trade Deal

In a significant move towards strengthening India-US trade relations, the Indian government is considering reducing tariffs on automobiles as part of a broader trade agreement. However, this potential concession comes with a condition—key agricultural products must be kept out of the negotiation table.

According to government officials, India is working on a strategic plan to safeguard its sensitive agricultural sectors while progressing with a bilateral trade agreement (BTA) with the United States. “Meetings between the finance, agriculture, and commerce ministries are happening daily to align positions and finalise calculations,” a senior official told Moneycontrol. The aim is to finalise the trade deal by August or September.

This high-level negotiation is a part of the ambitious “Mission 500″—a joint initiative set during Prime Minister Narendra Modi’s recent visit to the US on February 13. The mission targets to boost bilateral trade between India and the US to $500 billion by 2030.

A Strategic Balancing Act

To ensure no sector is adversely affected, each ministry is preparing a carefully curated list of items for phased tariff reductions. These reductions may be spread over five to seven years, giving industries sufficient time to adjust and adapt.

“This will ensure adequate protection for our sensitive sectors such as key agricultural goods while allowing market access for others,” said one of the officials.

This phased approach reflects India’s intent to open up markets cautiously while safeguarding domestic interests, particularly in agriculture—a sector that sustains millions of Indian livelihoods.

Agriculture at the Heart of the Talks

The main point of contention appears to be agriculture. India is keen on protecting its agricultural products, and it wants to make sure that any trade agreement does not compromise this vital sector. One official, in a slightly humorous tone, remarked, “There will be no trade deal with the US if it is not a win-win. If they ask for agriculture, we will ask for peanut butter.”

This analogy underlines India’s position clearly: reciprocity and mutual benefit are non-negotiable.

Why This Deal Matters

A trade deal between India and the US could be a major milestone in global commerce. It could help streamline duties, enhance exports, and boost investments across sectors such as automobiles, technology, pharmaceuticals, and agriculture. For India, it also signals a shift towards a more open and calculated trade strategy in global markets.

However, the delicate balancing act between tariff cuts and sectoral protection is what makes these negotiations so complex and crucial.