As Indian trade negotiators arrived in the U.S. capital this Friday for what could be the conclusive round of in-person talks, the fate of a "very big" trade deal, as touted by U.S. President Donald Trump, increasingly hinges on a contentious issue: agriculture. With the July 9 deadline for reciprocal tariff pauses fast approaching, both nations are locked in a high-stakes standoff over market access for farm produce, directly impacting the livelihoods of millions and broader food security concerns.
President Trump, speaking from the White House on Thursday, expressed confidence in a deal that would "open up India," drawing parallels to the recently signed China trade agreement. However, the path to such an opening is fraught with friction, particularly regarding agricultural trade.
The Indian delegation, led by chief negotiator Rajesh Agarwal, Special Secretary in the Department of Commerce, landed in Washington on Thursday, June 26. Their primary objective remains finalizing an interim trade pact before the U.S. tariff suspension expires. Yet, previous rounds of talks have stalled precisely on market access for agricultural and other sensitive products.
U.S. Demands vs. Indian Red Lines
Under the proposed agreement, the United States is aggressively pushing for enhanced market access for its agricultural exports. Key among these demands are increased entry for soya and corn, two major U.S. export commodities, and improved access for American apples. This push comes as the U.S. seeks to diversify its agricultural export markets, particularly amidst a protracted trade tussle with China.
However, India has drawn clear "red lines" on several sensitive agricultural sectors. Critically, New Delhi is highly unlikely to concede on dairy products or key food grains like rice and wheat. These categories are not just economically sensitive but politically charged, directly impacting the livelihoods of over 700 million people in India's vast rural economy and posing significant implications for national food security. India, for instance, has historically not opened its dairy sector in any of its free trade agreements.
Sources familiar with the negotiations indicate that while agricultural goods account for less than 5% of overall U.S. exports to India, Washington's insistence on these concessions is robust. This strong push has raised concerns among experts that any tariff concessions might embolden the U.S. to press India further on its domestic agricultural policies, specifically its Minimum Support Prices (MSP) and public procurement systems – critical pillars of India's farmer support and food policy.
Strategic Concessions and Balanced Interests
Despite the staunch opposition on sensitive areas, India has shown a willingness to consider targeted concessions to help bridge the trade imbalance. A working paper from India's NITI Aayog in May suggested that India could offer some concessions on "soybean oil imports," given its status as the world's largest edible oil importer and the U.S. having a soybean export surplus. Such a move would aim to reduce the trade deficit without harming domestic oilseed production.
Indian officials have also highlighted that diversifying oil and defense procurement aligns with the country's strategic interests. Increased sourcing from the U.S. in these areas could significantly help narrow the goods trade gap, as evidenced by India's crude oil imports from the U.S. surging by 11.49% to $63 billion in March 2025 year-on-year.
The Broader Trade Landscape
While agriculture remains a central sticking point, the U.S. also seeks duty concessions on certain industrial goods, automobiles (especially electric vehicles), wines, and petrochemical products. Additionally, it aims to ease FDI restrictions in multi-brand retail and liberalise rules on remanufactured goods. India, conversely, is pushing for duty concessions for its labour-intensive sectors such as textiles, gems and jewellery, leather goods, and certain agricultural items like grapes and bananas.
U.S. Commerce Secretary Howard Lutnick recently expressed optimism about a trade deal "in the not-too-distant future," but the lack of a valid U.S. Trade Promotion Authority (TPA) poses a legal constraint, limiting the administration's ability to reduce tariffs comprehensively and potentially confining discussions to executive-level tariffs.
Ultimately, the negotiations present a delicate balancing act for India. As Ajay Srivastava of the Global Trade Research Initiative (GTRI) emphasized, "Any trade deal with the U.S. must not be politically driven or one-sided, it must protect our farmers, our digital ecosystem, and our sovereign regulatory space." The degree to which India can hold its ground on agricultural sovereignty while navigating broader trade pressures will define the nature and durability of any emerging "mini-deal" between these two economic giants.