Way wide open for extensive access of American goods in domestic farm sector
By R. Suryamurthy
The India–United States Interim Trade Agreement has been unveiled as a diplomatic breakthrough and marketed domestically as evidence of India’s growing economic heft. In reality, it marks a decisive shift in how trade, security, and sovereignty are being re-ordered in India’s engagement with Washington. The agreement offers tariff relief at the surface, but beneath it lies a deeper realignment—one that trades policy autonomy, regulatory space, and strategic flexibility for conditional access to the American market.
The Global Trade Research Initiative (GTRI) has described the framework bluntly: tariff relief for India, tariff and strategic gains for the United States. That formulation captures the asymmetry at the heart of the deal.
The most visible outcome is the rollback of punitive U.S. tariffs imposed under executive orders that linked India’s trade treatment to its energy ties with Russia. Washington’s decision to eliminate the additional 25% duty imposed under Executive Order 14329 has been celebrated as a diplomatic success. Yet this relief does not stem from liberalisation or reciprocity. It flows from India’s alignment with U.S. national security objectives—specifically, commitments to curb Russian oil imports and pivot toward U.S. energy purchases.
Crucially, the United States has not reduced its MFN tariffs on a single product. What it has done is roll back its own legally questionable “reciprocal tariffs”, cutting them from as high as 50% to 18% on roughly 55% of Indian exports. In effect, Washington has traded relief from its own exceptional and coercive tariffs for permanent market access concessions from India. This is not free trade. It is managed compliance.
Under the framework, India has agreed to reduce or eliminate MFN tariffs on all U.S. industrial goods and on a wide range of agricultural products—many of them politically sensitive. These include fresh fruits like apples and oranges, soybean oil, wine and spirits, tree nuts, feed ingredients such as DDGs and red sorghum, and other products where U.S. exporters enjoy scale, subsidies, and deep domestic support.
As GTRI warns, tariff cuts on fruits and edible oils are likely to hurt Indian farmers and provoke domestic resistance. Soybean oil alone has long been protected to support Indian oilseed growers. The deal also leaves ambiguity around automobiles: whether tariff cuts will be limited and quota-bound, as in India’s FTAs with the UK and EU, or open-ended. If the latter, the implications for India’s auto ecosystem could be severe.
Equally concerning are prospective tariff eliminations on electronic components, smartphones, and solar panels—sectors at the core of India’s manufacturing ambitions. These concessions risk undercutting domestic production just as India is attempting to climb global value chains.
The U.S., by contrast, has retained full discretion. Future tariff relief for Indian exports—on pharmaceuticals, gems and diamonds, machinery—remains contingent on investigations, annexes, and executive satisfaction.
The most consequential element of the framework lies outside tariffs altogether. India has agreed to “strengthen economic security alignment” with the United States, including cooperation on supply chains, export controls, investment screening, and responses to “non-market policies of third parties”. This language is deliberately broad—and deeply intrusive.
As GTRI notes, such commitments could compel India to mirror U.S. sanctions and trade actions against third countries, including Russia and China, even when those actions conflict with India’s economic interests. If Washington imposes 100% tariffs on imports from a country on security grounds, India may be expected to follow suit. India could also be pressured to restrict transactions with countries under U.S. sanctions, effectively outsourcing elements of its foreign economic policy.
For a country that has long defended strategic autonomy and multi-alignment, this represents a structural constraint. Economic security, in this framework, becomes a tool of alignment—not resilience.
The agreement also opens India’s regulatory system to unprecedented external influence. India has committed to easing long-standing U.S. concerns over medical devices, eliminating import licensing for ICT products, and—within six months—deciding whether U.S. or international standards will be accepted for American exports in selected sectors. This is not mutual recognition. It is regulatory subordination.
GTRI points to the precedent of Malaysia, where U.S. certification for agricultural and food products now prevails over domestic sanitary and health standards—without reciprocal concessions from Washington. Similar outcomes in India would weaken domestic oversight in agriculture, health, and safety, turning standards into trade concessions rather than public policy instruments. Once conceded, such regulatory space is almost impossible to reclaim.
Digital trade is poised to become the next fault line. The framework commits both sides to removing “discriminatory or burdensome” digital practices and to establishing robust digital trade rules under the BTA.
In practice, this mirrors U.S. demands in other agreements: bans on digital services taxes, permanent moratoriums on customs duties on electronic transmissions, and constraints on domestic regulation of global technology firms.
Malaysia has already accepted such terms—giving up digital taxes, border collection rights, and even local revenue contributions from foreign platforms. If India follows this path, it would undermine its long-standing position at the WTO, weaken its ability to tax Big Tech, and sharply curtail future digital policy space.
For an economy increasingly driven by digital public infrastructure, this is not a marginal issue—it goes to the heart of sovereignty. Perhaps the most politically useful—but economically implausible—element of the deal is India’s stated intention to purchase $500 billion worth of U.S. goods over five years. This would require annual imports from the U.S. to more than double, from around $45 billion to nearly $100 billion.
As GTRI points out, even aggressive aircraft purchases cannot bridge this gap. India currently operates roughly 200 Boeing aircraft. Doubling that fleet over five years—an unlikely scenario—would amount to about $60 billion, and such decisions are made by private airlines, not governments. The figure appears aspirational at best, symbolic at worst—designed to signal political goodwill rather than economic feasibility.
The most misleading aspect of the announcement is the word “interim”. The framework locks India into trajectories—on agriculture, manufacturing, regulation, digital policy, energy sourcing, and security alignment—that will shape the eventual Bilateral Trade Agreement and constrain future choices.
As GTRI notes, the deal “opens the door for further commitments” on agriculture, regulation, and digital trade. Once opened, those doors rarely close. India has gained tariff relief. But the price is high: permanent market access for U.S. goods, diminished regulatory autonomy, constrained third-country relations, and strategic commitments that go well beyond trade.
This may be a calculated choice in a fragmented global order. But it should be debated honestly. Because this agreement is not merely about lowering tariffs—it is about redefining who sets the terms of India’s economic future, and how much sovereignty New Delhi is willing to place on the negotiating table. (IPA Service)
