India and the United States are two of the largest democracies and global economic powerhouses. Yet, for years, their bilateral trade relationship has been complicated—marked by tariff disputes, agricultural protectionism, and regulatory friction. However, in recent months, both nations have made notable progress in resolving long-standing agricultural and tariff-related tensions.
These developments are not just about easing trade barriers—they could redefine global trade flows, impact food security, and shift the geopolitical balance of agri-commerce. This article offers a deep dive into the evolving India–US trade dynamic, focusing on agriculture and tariffs.
🕰️ Historical Trade Tensions Between India and the US
To understand the gravity of the current breakthrough, one must first revisit the strained trade history between India and the United States. Since the early 2000s, trade negotiations have been marred by disagreements over subsidies, tariffs, and access to each other’s agricultural markets.
The US has often criticized India’s high tariffs on food items like almonds, dairy, poultry, and apples. India, on the other hand, has argued that American agricultural exports often undermine local farmers and food sovereignty.
Matters worsened during the Trump administration when the US revoked India’s Generalized System of Preferences (GSP) status, a trade privilege that allowed Indian exports duty-free access to the US market. In retaliation, India imposed tariffs on 28 US products, including walnuts and chickpeas.
🕊️ Easing of Tariffs: A Turning Point
Recent diplomatic moves show a willingness to de-escalate. In 2023 and 2024, India agreed to roll back retaliatory tariffs on key US goods, especially those from politically sensitive states like California (almonds, walnuts, pistachios) and Washington (apples). In return, the US has begun re-examining India's GSP status and opened dialogue for reinstating trade benefits.
This détente is not just symbolic. It reflects deeper, mutual recognition of strategic interests—particularly in countering China’s dominance in global trade. Both countries see trade normalization as a tool for economic resilience and diplomatic alignment.
🌾 Agriculture at the Core: A Delicate Balancing Act
Agriculture is a politically sensitive sector in both nations. In India, over 50% of the population depends on agriculture, making food pricing, subsidies, and import policies central to electoral politics. In the US, powerful farming lobbies and agribusiness giants drive export agendas.
US agri-exporters have long demanded greater access to India’s rapidly growing consumer market, especially for dairy, poultry, and genetically modified (GM) crops. India has resisted, citing food safety, religious norms (e.g., cow slaughter restrictions), and farmer protection.
In the current round of talks, both sides are prioritizing regulatory alignment:
- Sanitary and Phytosanitary Measures (SPS): India is working on streamlining import protocols and plant/animal health regulations to facilitate safer and faster US agricultural imports.
- Market Access Commitments: India has offered limited access for certain US dairy products under stricter labeling and safety guidelines.
- Reciprocity in Exports: The US is reviewing India’s requests to export mangoes, pomegranates, and basmati rice with less stringent cold treatment requirements.
🧀 Dairy Diplomacy: The Sticking Point
One of the thorniest issues is dairy. India’s dairy sector is largely informal and sacred in Hindu culture. The idea of importing milk or cheese from cattle raised on blood meal or slaughter byproducts is unacceptable to Indian religious norms.
US exporters have struggled with India’s cultural certification requirements, which mandate that imported dairy products be sourced from cattle not slaughtered for food. While the US sees this as non-scientific and protectionist, India defends it as a matter of consumer trust and belief.
There’s some movement: India may accept traceability systems or third-party certifications, allowing US producers to meet cultural criteria without altering production. In return, the US could lower tariffs on Indian processed dairy exports, such as ghee and paneer.
🚢 Strategic Importance of Reducing Trade Friction
This alignment on trade is about more than goods—it's about geopolitics. Both India and the US are trying to reduce their economic dependencies on China. Building a trusted bilateral supply chain is essential for both food security and national security.
India’s goal is to become a global food processing and export hub. The US needs stable, tariff-friendly destinations for its surplus agri-produce. With shared climate goals, sustainable farming partnerships are also on the horizon, including carbon farming credits, ag-tech collaborations, and digital traceability.
📊 The Numbers: Trade Volumes and Tariff Impact
In FY 2024, India–US bilateral trade in goods reached $135 billion, of which agricultural products accounted for over $10 billion. This includes:
- US exports to India: Almonds, apples, walnuts, chickpeas, cotton
- India exports to US: Rice, spices, seafood, processed foods
After India reduced tariffs on US walnuts from 100% to 30%, American exporters regained access to one of the fastest-growing nut markets. India, in turn, is lobbying for reduction in non-tariff barriers like lengthy import clearance times and pesticide residue limits.
These shifts can have ripple effects on commodity prices, supply chain investments, and even retail inflation in both countries.
🔬 Intellectual Property & GM Crops
Another major component of the trade talks is biotechnology. The US supports the use of GM seeds for increasing crop yields. India remains cautious, given past controversies around Bt cotton and ongoing debates over GM mustard.
However, India is investing in agri-research and precision farming, and may collaborate with the US on gene editing technologies like CRISPR, which sidestep the regulatory baggage of GMOs.
The US, in turn, is urging India to strengthen its plant variety protection (PVP) and IP laws, which would help American seed companies operate more securely in the Indian market.
🛡️ Food Security & Export Bans: Another Dispute
India has occasionally banned or restricted exports of key commodities (like rice, wheat, and sugar) to control domestic prices. The US sees these bans as market-distorting, especially when done without WTO notification.
India argues that such moves are necessary for national food security. A potential middle ground could be the establishment of export quotas or price floors, instead of outright bans. This would ensure global market stability while protecting Indian consumers.
💰 Tariff Politics in the Shadow of Elections
Both countries are navigating these talks carefully ahead of elections. India’s general elections in 2024-25 mean protecting farmers from import shocks is non-negotiable. The US presidential race also influences how trade deals are perceived by blue-collar and rural voters, who often oppose globalization.
Yet, the tone of the talks is less confrontational than in the past, reflecting a realization that supply chain resilience trumps isolationism in a post-COVID world.
🌐 The WTO Angle: Reform and Representation
Both India and the US have clashed repeatedly at the World Trade Organization (WTO)—especially over food stockholding programs and farm subsidies.
India has pushed for a permanent solution to public food procurement, which it sees as essential to its National Food Security Act. The US wants stricter disciplines on domestic support.
Interestingly, the current bilateral talks have shifted some issues away from WTO litigation to cooperative resolution, hinting at a pragmatic bilateralism that could replace deadlocked multilateralism.
🧠 Conclusion: A Rare Win-Win in Global Trade?
India and the US are quietly crafting a new model for trade diplomacy, one that respects domestic constraints while pursuing strategic alignment. If current momentum continues, we may soon witness:
- Reduced tariffs on dozens of agricultural products
- Greater regulatory transparency
- Digital traceability for agri-exports
- Joint investment in climate-smart farming
These aren't just bureaucratic wins—they can reshape agricultural futures for millions of farmers, exporters, and consumers. In a fractured global trade landscape, this is one of the few constructive, forward-looking bilateral engagements—and it deserves close attention.