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    Home»Commodities»US Tariffs: India Draws Red Lines Around Farm Commodities
    Commodities

    US Tariffs: India Draws Red Lines Around Farm Commodities

    July 6, 20256 Mins Read


    Very sensitive items — such as apples, which carry political weight and are closely tied to farmer interests in states like Himachal Pradesh and Uttarakhand — may face restricted concessions.

    IMAGE: A labourer sorts freshly arrived wheat at the grain market in Amritsar. Photograph: ANI Photo

    In its delicate negotiations on agricultural items under the proposed trade deal with the United States, India has drawn clear red lines, categorising its farm commodities into three distinct buckets — non-negotiable, very sensitive, and liberal — based on their economic and political sensitivity, said a government official.

    Staples such as rice and wheat fall under the non-negotiable category, where no tariff concessions will be entertained.

    Very sensitive items — such as apples, which carry political weight and are closely tied to farmer interests in states like Himachal Pradesh and Uttarakhand — may face restricted concessions, possibly through minimum import prices (MIP) or tariff-rate quotas.

    However, for high-value, niche imports largely consumed by India’s affluent — including almonds, pistachios, walnuts, and blueberries — New Delhi is taking a liberal approach, signalling a readiness to drastically reduce tariffs as part of a broader give-and-take on trade.

    Though both countries have committed to signing a mutually beneficial Bilateral Trade Agreement (BTA) by this fall, India is pushing for an early tranche in order to avoid a 26 per cent reciprocal tariff scheduled to come into force from Wednesday, July 9.

    IMAGE: Women winnow rice in a village, in Morigaon. Photograph: ANI Photo

    “The focus under the early tranche deal is on market access, as the US is prioritising reducing its trade deficit with key trade partners. Other parts of the trade deal will be taken up later,” said the government official.

    On the issue of agricultural market access under the proposed deal, US Commerce Secretary Howard Lutnick underscored the need for political will on both sides.

    ‘The US understands (the political influence of) farmers and ranchers. These are the kind of people who have lots of political voices and we understand that,’ Lutnick said.

    ‘So what we try to do is find the path that is acceptable politically at home and for us as well.

    ‘We’ll find that path together. It’s just a smart way of doing it. We have that same political will here.’

    IMAGE: A farmer shows freshly harvested almonds at a village in Srinagar. Photograph: Imran Nissar/ANI Photo

    Ahead of the April 2 announcement of reciprocal tariffs, US agricultural commodity associations — representing items including milk, rice, wheat, soybean, corn, almonds, walnuts, pistachios, blueberries, cherries and table grapes — raised concerns over what they described as high domestic subsidies and significant trade barriers in India.

    This came in response to a review of unfair trade practices by partner countries, launched by the US trade representative.

    The International Dairy Foods Association (IDFA) said India represents tremendous potential for US dairy exports, which are currently limited by a combination of non-tariff barriers and steep tariffs.

    ‘Given that US dairy exports to India reached $52 million in 2024 just in the limited dairy products permitted to enter, IDFA believes the India market potential, if restrictions were lifted, is at least twice that amount due to significant demand in India for lactose, casein, and whey protein concentrates and isolates, which have historically been restricted,’ the association stated.

    The US Wheat Associates highlighted what it termed ‘high levels of domestic support’ for wheat production in India and trade-distorting high tariffs aimed at discouraging imports.

    ‘Compliance on trade-distorting domestic subsidy spending would send better market signals and increase economic returns to US producers (by $792 million by 2031/32),’ it said.

    IMAGE: A farmer peels a husk from a cob of corn during a harvest on the outskirts of Jabalpur. Photograph: ANI Photo

    The Illinois Corn Growers Association (ICGA) pointed to India’s continued import prohibition on genetically modified corn and ethanol for fuel, despite its ambitious biofuel targets.

    ‘If US corn were able to access just 15 per cent of Indian corn imports in the marketing year 2023/2024, farmers would have received about $22 million.

    ‘If the Government of India allowed the import of US ethanol for fuel use and we achieved just 5 per cent market share, those exports would be worth $237 million annually, ICGA said.

    The American Soybean Association said India continues to be a difficult market for US soy exports due to what it described as ‘significant tariff and non-tariff barriers’ favouring domestic producers over foreign imports.

    ‘The US has actively sought bilateral and multilateral opportunities to increase market access, so far without yielding improvements.

    ‘Soybeans and soybean products face tariffs from 15 per cent to 45 per cent,’ the association said.

    The Almond Alliance, which represents farmers behind the largest US agricultural commodity exports to India, said that a reduction in import duties for inshell and kernel almonds would give the US a more competitive footing against Australia, which already enjoys a 50 per cent duty advantage under its trade deal with New Delhi.

    The North American Blueberry Council (NABC) noted that fresh and frozen blueberries currently face a 10 per cent tariff in India, while processed blueberries are subject to tariffs ranging 10 to 50 per cent.

    “India’s tariffs are unwarranted and constrain US blueberries exports.

    ‘NABC urges USTR to pursue the elimination of India’s tariffs on US fresh, frozen, and processed blueberries through any available opportunity.’

    IMAGE: A farmer shows fresh harvested cherries from a cherry orchard in Budgam. Photograph: ANI Photo

    The California Cherry Board (CCB) said that although India represents a potential growth market, US exports are held back by India’s high 30 per cent tariff on fresh cherry imports.

    ‘To facilitate the growth of US cherry exports to India, the CCB seeks the elimination of India’s tariff on imports of sweet cherries through any available opportunity.

    ‘The CCB would support a US-India trade agreement that achieved this objective,’ it said.

    IMAGE: A farmer shows freshly harvested grapes in Ganderbal. Photograph: ANI Photo

    The California Table Grape Commission said that US fresh grape exports have lost market share to Australia and Chile, which benefit from reduced import duties under their respective trade agreements with India.

    ‘The commission asks USTR to seek the elimination of India’s high 30 per cent tariff on US fresh (grapes) through any available opportunity and to pursue reforms to India’s import and taxation system to reduce the burdens on trade,’ it added.

    Feature Presentation: Ashish Narsale/Rediff



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