Does the “big, beautiful”, does the Indian-American trade agreement slip out of reach?
With only days before a deadline of July 9 fixed by the administration of the American president Donald Trump, the hopes of winning an interim commercial pact between Delhi and Washington remain alive but more and more entangled in the hard negotiation.
Despite the press secretary of the White House, Karoline Leavitt, suggesting that the agreement was imminent, and the optimistic assertion of the Minister of Indian Finance Nirmala Sitharaman according to which Delhi welcomes “a great, beautiful” agreement – in response to the assertion of Trump according to which a trade agreement with Delhi arrives and “will open” the Indian market – Trump negotiators in difficult discussions.
The key points of the snack points persist, in particular on agricultural access, automotive components and prices on Indian steel.
Indian trade officials extended their stay in Washington for another series of talks, even if Delhi signals “very long red lines” on farm and dairy products, and that the United States is pressing for wider market openings. The tone remains optimistic – but the window to conclude an agreement seems to shrink.
“The next seven days could determine if India and the United States are content with a limited” mini-deal “or move away from the negotiating table-at least for the moment,” explains Ajay Srivastava, a former Indian trade official who directs the research initiative on world trade (GTRI), a Delhi-based reflection group.
This uncertainty depends on a few key flash points – no more controversial than agriculture.
“There are two real challenges to conclude an initial agreement. The first on the list is access to the United States for the Indian market for basic agricultural products. India will have to protect its basic agricultural sector for economic and political reasons,” said Richard Rossow, who follows India economics at Washington’s Center for Strategic and International Studies, BBC.
For years, Washington has put pressure on better access to the agricultural sector in India, considering it as a major unexploited market. But India has fiercely protected it, citing food security, livelihoods and interests of millions of small farmers.
Rossow says that the “second problem is India’s non -pricing obstacles. Problems such as the greatest number of “quality control orders” in India (QCO) are important obstacles to access to the American market and can be difficult to manage significantly in the context of a commercial agreement “.
The United States has raised concerns about what it calls the rules of growing and heavy importation of India. More than 700 QCOS – part of the “autonomous India” push – aim to limit low -quality imports and promote national manufacturing. Suman Berry, the main member of a Niti Aayog government think tank, also qualified these “malignant intervention” rules that restricted imports and increased costs for national and small scale industries.
The elephant in the room is agricultural exports. India-US Farm Trade remains modest at 8 billion dollars, India exporting rice, shrimp and spices, and the United States sending nuts, apples and lenses. But as business negotiations are growing, Washington is considering larger agricultural exports – corn, soy, cotton and corn – to help reduce its $ 45 billion trade deficit with India.
Experts fear that tariff concessions can put pressure on India to weaken its minimum support prices (MSP) and public procurement – key protections that protect farmers from price accidents by guaranteeing fair prices and purchasing of stable crops.
“No tariff section is expected for dairy products or key food grains such as rice and wheat, where agricultural livelihoods are at stake. These categories are politically and economically sensitive, affecting more than 700 million people in the rural economy of India,” said Srivastava.
Curiously, a recent Niti Aayog paper recommends price reductions on American agricultural imports – including rice, dairy products, poultry, corn, apples, almonds and GM soy – as part of a proposed Indian Commerce Pact. It is not clear, however, if the proposal reflects the official thought of the government or remains a political suggestion on paper.
“If the United States had to say” no agreement “if India does not include access to basic agriculture, then clearly American expectations were not fixed properly. Any democratically elected government will have political limits to the choice of commercial policy,” said Rossow.
So what could it be with the agreement now?
Experts like Mr. Srivastava believe that “the more likely result is a limited commercial pact” – stylized after the US -UK mini trade agreement announced on May 8.
As part of the proposed agreement, India can reduce prices on a range of industrial goods – including cars, long -standing American demand – and offer limited agricultural access via price cuts and quotas on certain products such as ethanol, almonds, nuts, apples, grapes, lawyers, olive oil, spirits and wine.
Beyond the price cuts, the United States should push India for large-scale commercial purchases-from oil and LNG to Boeing aircraft, helicopters and nuclear reactors. Washington can also seek the softening of the IED in the Multibrand retail trade, benefiting to companies like Amazon and Walmart, and the relaxed rules on new manufactured goods.
“This” Mini -Deal “, if it was concluded, would therefore focus on reductions in prices and strategic commitments, leaving broader FTA problems – including trade in services, intellectual property rights (IP) and digital regulations – for future negotiation,” said Srivastava.
At first, India-Us talks seemed to be based on a clear and equitable vision.
“The two leaders [Trump and Modi] Take up a simple concept at their first summit this year. The United States would focus on manufactured products that are high capital intensity, while India would focus on articles that are at high workforce, “said Rossow. But things seem to have changed since.
If talks collapse, experts think that Trump is unlikely to restore the steep rate of 26% on India. Instead, a reference rate of 10% can apply to most Indian imports, in addition to existing MFN rates (MFN or the most favored national rate is the lowest rate of a member country of world trade takes another member of the WTO).
While 57 countries have been faced with these levies in April, only the United Kingdom has hit an agreement so far. The targeting of India could specifically seem unjust. “However, with Trump, surprises cannot be excluded,” said Srivastava.
