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Summary
Indo-US Trade Deal discussions have moved forward with the signing of an interim agreement, but the practical impact on trade flows is expected to unfold gradually. While the deal has been positioned as mutually beneficial, several elements, including India’s energy security priorities and agricultural safeguards, indicate that headline expectations may run ahead of near-term outcomes.
Indo-US Trade Deal and Energy-Linked Conditions
Indo-US Trade Deal progress is closely linked to energy considerations, particularly India’s approach to crude oil sourcing. A recent US executive order removed a 25% duty linked to crude oil purchases, explicitly tying the move to commitments around reducing purchases of Russian crude. A further tariff reduction of seven percentage points is expected through another executive order.
India has maintained that energy security remains its primary consideration. The Ministry of External Affairs has reiterated that diversifying energy resources is a priority, suggesting that any adjustment in sourcing will be driven by strategic necessity rather than trade commitments alone.
Agricultural Access Under the Indo-US Trade Deal
Agricultural Access remains a sensitive component of the agreement. India has retained firm protections around its agriculture and dairy sectors. Contrary to speculation, there is no provision for US corn or soybeans to enter the Indian market, eliminating the possibility of genetically modified corn or soybeans being imported.
On the import side, the US is expected to gain improved access for apples, select tree nuts including pistachios, walnuts and almonds, as well as soybean oil, though these entries will be governed by lower duties rather than unrestricted access.
Import Safeguards and Non-GMO Policy
Import Safeguards have been embedded into the deal structure. For apples, India is applying a framework similar to its agreement with the European Union, allowing imports at a 25% duty alongside a minimum import price of ₹80 per kg to protect domestic producers.
Soybean oil, cotton, apples and DDGS are expected to enter India under either quantitative restrictions or minimum import price mechanisms. India’s position on genetically modified products remains unchanged, with the Agriculture Minister reiterating that no GM products will be permitted, reinforcing safeguards around domestic agriculture.
Sensitive Crops and Domestic Protection
Sensitive Crops such as rice, wheat, meat, ethanol, tobacco, and fruits including citrus and strawberries remain protected under the agreement. These exclusions underline India’s effort to balance trade engagement with domestic agricultural stability.
Concerns have been raised around concessional imports of DDGS for animal feed, particularly by soybean meal and maize sectors. However, potential imports are expected to be capped at around 500,000 tonnes, and prevailing international prices are not seen as disruptive to domestic industries.
Market Access Gains for Indian Exports
Market Access improvements are expected for Indian agricultural exports, including spices, tea, coffee, mangoes and pineapples, which will benefit from lower or nil tariffs in the US market. Beyond agriculture, labour-intensive sectors such as textiles, gems and jewellery, leather and plastics are expected to gain from a reduced US tariff rate of 18%.
Conclusion
Indo-US Trade Deal outcomes are likely to emerge over time rather than immediately. With India maintaining firm positions on energy security and agricultural protection, the agreement reflects a calibrated approach that balances strategic interests with incremental market access. As the process continues, tangible benefits for both sides are expected to accrue gradually rather than in a single step.