Why row over farm markets derailed trade talks between US and India
25% tariff on Indian goods
starting August 1, citing New Delhi's high tariffs and strict non-monetary trade barriers.
Additionally, a penalty would be levied on India due to its relation with Russia.
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Agricultural row
India has resisted U.S. demands to open its agricultural and dairy markets, saying such moves would hurt millions of poor farmers. New Delhi has historically excluded agriculture from free trade pacts to protect domestic livelihoods.
Tariff cuts on corn, soybean, wheat and ethanol remain off the table, with Indian officials citing risks from subsidised U.S. farm products. Domestic automakers, pharma firms and small industries have also lobbied for only a gradual opening, fearing disruption from U.S. imports.
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Trump slaps 25% tariff on India, plus a penalty for using Russian weapons & oil
According to a White House fact sheet, India imposes an average MFN (Most Favoured Nation) tariff of 39% on imported farm goods, compared to 5% in the U.S., with some duties as high as 50%.
Trump's administration has repeatedly flagged these tariffs as a key obstacle to deeper trade ties with India.
Washington is pushing for better access to India's markets for agriculture, ethanol, dairy, alcoholic beverages, autos, pharmaceuticals, and medical devices. It also wants India to reduce non-tariff barriers, and reform rules on patents, digital trade, and data flows.
Despite offering limited tariff cuts and boosting imports of U.S. energy and defence goods, India says it is still awaiting clear proposals from Washington. Officials cite Trump's unpredictable trade moves as a concern.
Indian exporters remain uneasy over rising U.S. levies on imports: a 10% base tariff, up to 50% on steel and aluminium, 25% on autos, and now 25% across a broader range of goods.
U.S. manufacturing exports to India, valued at nearly $42 billion in 2024, face high tariffs, ranging from 7% on wood products and machinery to as much as 15% to 20% on footwear and transport equipment, and nearly 68% on food.
WHY ARE FARM GOODS IMPORTS SENSITIVE IN INDIA?
Agriculture and its allied areas contribute just 16% to India's $3.9 trillion economy, but sustain nearly half of the country's 1.4 billion population. As farmers remain the most powerful voting bloc, Prime Minister Narendra Modi's government was forced into a rare retreat four years ago when it tried to push through controversial farm laws. The prospect of cheaper imports from the United States threatens to drive down local prices, handing the opposition a fresh opportunity to attack the government. New Delhi has traditionally kept agriculture out of Free Trade Agreements with other nations. Granting market access to the U.S. could force India to extend similar concessions to other trading partners.
(with Reuters inputs)
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