India-US FTA: All the furore over inclusion of agriculture and dairy in the deal

United States President Donald Trump and Prime Minister Narendra Modi announced that India and the US have decided to move towards sealing a free trade agreement (FTA), with the US imposing an 18% tariff on Indian goods. While the deal is yet to be formally finalised, the announcement has opened the door to debate over what the India-US FTA will include—particularly concerns around the agriculture, farming, and dairy sectors.

In a post on his Truth Social platform on February 2, President Trump said that under the agreement, Prime Minister Modi committed to “BUY AMERICAN, at a much higher level, in addition to over $500 BILLION DOLLARS of US Energy, Technology, Agricultural, Coal, and many other products.” Prime Minister Modi, however, did not mention any specific sector or industry in his announcement on X (formerly Twitter).

American farm products to be exported: US Agri Secretary

Concerns around the agriculture sector gathered momentum in India after US Secretary of Agriculture Brooke Rollins said on X that American farm goods would see higher exports under the India–US trade pact.

“New US-India deal will export more American farm products to India’s massive market, lifting prices, and pumping cash into rural America,” Rollins wrote, adding that in 2024, America’s agricultural trade deficit with India stood at $1.3 billion.

“India’s growing population is an important market for American agricultural products, and today’s deal will go a long way in reducing this deficit,” she said.

Agricultural products to see 0% tariffs: USTR Greer

Further fuelling the debate, US Trade Representative Jamieson Greer said that as part of the deal, India will lower tariffs—down to zero percent—on a range of US goods, including industrial and agricultural products.

“The US will continue to maintain some level of tariff against India (18%) because we have this giant trade deficit with them. But they’ve also agreed to reduce their tariffs for us on a variety of agricultural products, manufactured goods, chemicals, medical devices, etc. It’s an exciting opportunity for both countries,” Greer said in an interview with CNBC.

Opposition, farmers’ unions criticise inclusion

These remarks were not received well in India. The Congress-led Opposition, along with farmers’ unions such as the Samyukta Kisan Morcha (SKM), raised concerns over the deal and criticised the government for allegedly bowing to pressure from the US while sidelining the interests of Indian farmers and dairymen.

Leader of Opposition in the Lok Sabha Rahul Gandhi questioned the claims made by US officials regarding the farming and dairy sectors, alleging that Prime Minister Modi had succumbed to President Trump’s pressure to finalise the FTA while “selling out” the interests of Indian farmers.

The SKM later issued a statement “strongly condemning” what it called the betrayal of the people—“especially farmers”—by the Modi government for allowing zero percent import tariffs on US goods and “surrendering to the pressure of US imperialism,” according to news agency PTI.

“This trade deal, which allows Indian markets to be flooded with highly subsidised US agricultural products, will devastate the entire peasantry in India,” the statement said.

Piyush Goyal clarifies agriculture, dairy are protected

Amid the backlash, Union Commerce and Industry Minister Piyush Goyal held a press briefing to clarify the government’s position.

“Our teams were engaged with the US for months over several issues,” Goyal said, adding that earlier 50% tariffs had significantly impacted marine and textile exporters as well as farmers. “Those concerns were clearly communicated during negotiations,” he said.

He asserted that the deal would “fully protect sensitive sectors, including the interests of our agriculture and dairy sectors,” while opening up significant opportunities for labour-intensive and export-oriented industries such as textiles, plastics, apparel, home décor, leather and footwear, gems and jewellery, organic chemicals, rubber goods, machinery, and aircraft components.

“This is truly a deal that every Indian can be proud of,” Goyal said.

He reiterated these clarifications during his addresses in both the Lok Sabha and the Rajya Sabha on February 4.

Why agriculture and dairy matter in the India–US FTA

India has consistently maintained a firm stance on protecting its agriculture and dairy sectors in trade negotiations with any country.

The government argues that opening up these sectors could adversely affect a large population dependent on farming and dairy, primarily rural farmers and dairymen.

Agriculture and dairy have remained “sticky issues” in negotiations with multiple partners, including the EU, the UK, and the US.

While Goyal has reiterated that these sectors are protected under the agreement, all eyes are now on the final India–US FTA document, which is reportedly in the final stages of drafting.