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Bonvista Financial Services Pvt. Ltd.
Piyush Goyal, the minister of commerce, recently claimed that Indian farmers, dairy producers, and rural jobs will not be harmed by the new trade agreement between the US and India. According to him, the government has negotiated a tariff system that safeguards the nation's most sensitive food industries while opening up more export markets for Indian labour-intensive industries, manufacturers, and tech companies.
He claims that since Washington reduced taxes on several Indian goods from about 50% to a consistent 18%, India "faces lower US tariffs than many competing economies." However, India has not welcomed any US agricultural exports that would jeopardise indigenous livelihoods.
He stated that the agreement "increases India's export potential in high-value sectors while maintaining farmers' full protection."
Which Categories in India are Fully Protected?
India offers no tariff discounts in these categories. Duties remain just the same. The government's political speech revolves around this.
- Staple crops and core food items
Essential food sources that sustain millions of farmers are fully protected in India.
- Wheat
- Rice
- Maize
- Soya and oilseeds
- Poultry and several meat categories
- Ethanol
- Tobacco
These remain with high duties and no new access for US exporters.
- India's entire dairy sector
The dairy sector is categorised as a “100 % secure sector”.
- Milk (all forms)
- Cheese
- Butter
- Ghee
- Cream
- Yoghurt
- Buttermilk
- Whey
- Paneer
The government says there is “no market opening” for US dairy at all.
- Vegetables, fruits and processed foods
A long list of fresh, frozen, dried and canned products stays fully protected.
Fresh vegetables: Potatoes, garlic, mushrooms, gourds, okra, green pepper, peas, beans, pumpkins and many others.
Processed vegetables: Frozen potatoes, peas and beans, mixed vegetables, canned items, preserved cucumbers and mushrooms.
Dried vegetables and pulses: Dried onions and garlic, dehydrated powders, green peas, kabuli chana, beans, sweet potatoes.
Sensitive fruits: Bananas and banana products, Mangoes and mango products, Citrus fruits like oranges, lemons, limes and grapefruit, Berries including strawberries.
- Spices and India's flavour heritage: Black pepper, cloves, chillies, cinnamon, coriander, cumin, turmeric, ajwain, fenugreek, mustard, cassia and related spice products.
- Black tea, green tea and tea bags.
Summary: Agriculture, dairy, spices and tea remain untouched.
Where India Is Cutting Tariffs for US Imports
These are sectors outside sensitive farm lines.
- Industrial and manufactured goods
India reduces or eliminates tariffs on:
- Machinery
- Electricals
- Vehicles and components
- Chemicals
This aligns with India's push for manufacturing and exports.
- Technology, data‑centre and semiconductor hardware
- India lowers duties on:
- High‑end servers
- AI hardware and GPUs
- Data‑centre equipment
- Semiconductor inputs
India's tech and AI infrastructure should become more affordable and competitive as a result.
- Non‑sensitive agricultural and food items
These are mostly consumed by higher‑income households and do not threaten small farmers.
- Dried distiller’s grains
- Red sorghum
- Tree nuts
- Soybean oil
- Select fruits
- Wines and spirits
What Does the US Offer India in Exchange?
A uniform 18% tariff will be imposed by the US on a large number of Indian products that were previously subject to significantly higher charges.
The following are the Sectors that benefit from this deal:
- Textiles and apparel
- Leather and footwear
- Plastics and rubber goods
- Home décor and carpets
- Machinery and chemicals
- Artisanal goods
- Pharmaceuticals
- Gems and diamonds
- Aircraft parts
Additionally, the US is removing previous metal security duties on a few Indian goods.
How Alcohol Affects the Agreement?
Alcohol is definitely not in the protected category, but rather in the open one. It is not on the sensitive list since it does not compete with Indian farmers.
Changes in Tariff: Previously, imported gin, rum, whisky, and other spirits were subject to a tariff of almost 150 per cent. This percentage is anticipated to drop to 30 to 40 per cent under the new India-US and India-EU arrangements.
Impact on prices: After the new rates go into effect, a mid-range Scotch or Bourbon that currently costs approximately Rs 4,500 in Mumbai could only cost about Rs 2,500 to Rs 3,000.
How will India benefit from this Trade-Deal?
- Boost for Indian exports
Easy access and reduced prices will help a few important industries, including textiles, clothing, leather, plastics, organic chemicals, and home décor.
Indian exports are now considerably more competitive in the largest consumer market in the world thanks to the significant reduction in US tariffs on Indian items, which were previously at punitive levels (up to almost 50%).
- No tariff access in places of high-value:
Once the complete deal is in place, a few Indian goods, such as gems and diamonds, aircraft parts, and generic medications, will be allowed duty-free entry into the US, strengthening sectors in which India currently excels.
- MSMEs & Job creation
For Indian manufacturers, notably MSMEs, exporters, and labour-intensive industries, the agreement is anticipated to open up a massive $30 trillion market, potentially generating lakhs of jobs, especially for women and young people.
- Broader tech and industrial gains:
India will have easier access to cutting-edge US tech products like GPUs and data centre equipment, which can support the development of its digital infrastructure and artificial intelligence ecosystems.
In order to lower non-tariff obstacles in the future, the deal also supports for increased regulatory cooperation and more transparent trade regulations.
- Protection for India’s sensitive & core sectors:
As a core agricultural and dairy items (such as wheat, rice, milk, etc.) are still protected, Indian farmers won't have to deal with an unexpected influx of imports.
- Increased trade flows & investment
India pledged to enhance economic connections and supply-chain integration by importing up to around $500 billion worth of US commodities over a five-year period, including energy, aircraft, and technology.
- Impact on Indian Financial Markets:
Investor confidence that trade growth will support GDP was demonstrated by the good reaction of Indian markets (stocks and rupee).
In summary, while attempting to safeguard sensitive industries like agriculture, the agreement increases employment and access to technology, decreases barriers for Indian exports, and expands economic connections. Top of Form
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