As the U.S. and India negotiate a limited trade deal before the August 1 deadline, India resists U.S. demands for agricultural market access. Concerns center on dairy and GM foods, with a potential $12.3 billion loss to Indian farmers. Experts warn of risks to food security and rural livelihoods, while Trump’s aggressive tactics raise fears of asymmetric outcomes.
As the August 1 deadline looms, India and the United States are locked in intense, last-ditch negotiations for a limited trade deal, with the fate of India’s vast agricultural and dairy sectors at the heart of the contentious talks. While U.S. President Donald Trump projects confidence in an imminent agreement, New Delhi remains steadfast in protecting millions of its farmers from what it fears could be economically devastating concessions.
The U.S. has reportedly offered to lower proposed tariffs on Indian goods to below 20%, a notable reduction from the 26% initially threatened by Trump. While this could offer India a competitive edge over some rivals, the core sticking points revolve around American demands for greater access to India’s highly sensitive agricultural markets.
The $12 Billion Red Line: India’s Dairy Farmers on Edge
India’s primary “red line” in these negotiations is its dairy sector. The U.S. is pushing hard for reduced tariffs and the easing of non-tariff barriers, particularly certification requirements related to animal feed. India, however, has drawn a firm line, citing both economic and deeply held cultural and religious sensitivities.
An alarming analysis by the State Bank of India (SBI) estimates that opening India’s dairy sector to U.S. imports could lead to an annual loss of approximately $12.3 billion (Rs 1.03 lakh crore) for Indian dairy farmers. This potential fallout highlights the immense vulnerability of a sector that directly employs an estimated 80 million people, largely small and marginal farmers, and significantly contributes to India’s rural economy. A 15% drop in domestic milk prices, as projected by SBI, would be catastrophic for these livelihoods.
Beyond the economic impact, India’s insistence on certification that imported milk products come from cows not fed animal-based products (like meat or blood) is a “non-negotiable” due to widespread cultural and religious objections. This clashes directly with common U.S. dairy practices and reflects a broader concern for food integrity and consumer trust.
Guarding Against Genetically Modified Inroads
The agricultural battle extends to genetically modified (GM) crops. The U.S. views India’s regulations on GM food as “ambiguous” and unscientific, hindering American biotechnology exports. However, India maintains a cautious stance due to strong public opposition, environmental concerns, and fears that the decentralised nature of its supply chain could lead to cross-contamination, impacting its exports to GM-sensitive markets like the EU. India also insists on non-GM and GM-free certificates for 24 products, even for non-commercially modified crops, to ensure traceability and maintain consumer confidence.
Experts like Ajay Srivastava of the Global Trade Research Initiative (GTRI) warn that permanent tariff reductions on U.S. farm products could pose significant risks to India’s food security. Heavily subsidized U.S. agricultural exports, including rice, dairy, and GM soy, could “overwhelm Indian markets and distort prices,” potentially devastating the livelihoods of India’s more than 700 million farmers. “India must retain policy space to manage food stocks, support rural incomes, and respond to global shocks,” Srivastava asserts, emphasising that in today’s geopolitically unstable world, “food security must remain sovereign.”
The ‘Trump Playbook’ and the Peril of Asymmetrical Deals
The backdrop to these agriculture-focused talks is President Trump’s aggressive and often unilateral negotiation tactics. Srivastava points to recent deals with Indonesia and Vietnam where Trump announced sweeping concessions following private phone calls with foreign leaders, frequently exceeding what official negotiators had agreed. For instance, Trump’s claimed outcomes for Vietnam included a 20% tariff on its exports to the U.S., a figure quickly disputed by Vietnamese officials who cited an 11% agreement.
This “Trump playbook” raises concerns that India’s negotiators might secure certain concessions, only for Trump to publicly announce far more beneficial terms for the U.S. after a direct call with Prime Minister Narendra Modi. Without a written, jointly signed agreement, India risks being bound by verbal promises that could severely undermine its long-term agricultural interests.
A Broader Strategic Calculus
While the focus remains intensely on agriculture and dairy, the interim deal is also a stepping stone towards the broader U.S.-India COMPACT initiative, aiming to double bilateral trade to $500 billion by 2030. India is also pushing for concessions on its steel, aluminum, and auto exports, while the U.S. seeks lower tariffs on products like walnuts and almonds.
However, the looming August 1 deadline and Trump’s threats of additional tariffs on BRICS nations underscore the pressure on India. Commerce Minister Piyush Goyal has reiterated that India will not be rushed into a deal that compromises its national interest. The coming days will reveal whether India’s firm stance on protecting its farmers and food security can withstand the intensifying pressure, or if it will be forced to make difficult compromises in the pursuit of a broader trade agreement