The interim trade framework agreed between India and the United States is not merely a technical arrangement on tariffs and market access. It reflects a deeper strategic choice India is making in a rapidly shifting global order—how to engage with open markets without compromising domestic economic stability, particularly in agriculture.
According to Commerce and Industry Minister Piyush Goyal, the framework is expected to open access to a nearly $30 trillion US market for Indian exporters, especially MSMEs, farmers, and fishermen. What stands out, however, is not just what India has agreed to open—but what it has firmly chosen to protect.
Agriculture: India’s Red Line
Agriculture has always been India’s most sensitive sector in trade negotiations. With nearly half the population dependent on farming and allied activities, exposing Indian agriculture to heavily subsidised US farm products would carry significant social and economic risks.
The government has therefore made it clear that no compromise has been made on core agricultural interests. Staples such as wheat, rice, maize, millets, flour, and the entire dairy sector have been kept almost completely outside the scope of the agreement. Agriculture Minister Shivraj Singh Chouhan’s assertion that farmers’ livelihoods remain fully protected is not rhetorical—it defines the structure of the deal.
What Has Been Opened—and Why
India’s tariff concessions are limited to carefully selected products that do not threaten food security or small farmers’ incomes. These include animal feed inputs such as dried distillers grains (DDGs) and red sorghum, tree nuts like almonds and walnuts, certain fruits, soybean oil, and alcoholic beverages.
This selective opening signals a calibrated approach to agricultural liberalisation, one that avoids blanket access while allowing room for strategic trade-offs.
Dairy, Spices, Fruits: Non-Negotiable Sectors
India’s firm stance on dairy is consistent with its long-standing trade policy. Millions of small farmers depend on cooperative-led dairy production, making the sector economically and politically non-negotiable. Milk, butter, ghee, cheese, yoghurt, and whey products remain fully protected.
Similarly, spices, vegetables, and fruits—areas where India enjoys both global competitiveness and deep domestic employment linkages—have been placed firmly in the protected category. These sectors are seen not merely as tradable goods, but as strategic assets.
Tariff Cuts and the Politics of Energy
The reduction of US tariffs on Indian goods from 50% to 18% is being projected as a major breakthrough. Yet the context matters. A significant portion of the earlier tariffs was punitive, imposed over India’s purchase of Russian oil.
With India agreeing to shift energy imports toward the US and Venezuela, Washington rolled back the additional duties through an executive order. The episode underlines a growing reality: trade policy is now inseparable from geopolitics and energy security.
Relief for Exporters—But Within Limits
While the framework offers relative relief to sectors such as aviation components, auto parts, and pharmaceuticals, many labour-intensive Indian exports—textiles, leather, plastics, and chemicals—will continue to face an 18% tariff in the US market.
The gains, therefore, are real but targeted. This is not a sweeping market-opening moment, but a step-by-step recalibration.
Conclusion: A Strategy of Balance
The India–US interim trade framework is best understood as a strategic balancing act rather than a bold liberalisation push. India has signalled willingness to deepen economic engagement with the US, while drawing firm red lines around agriculture and rural livelihoods.
As both sides aim for a comprehensive trade agreement by March 2026, the durability of this balance will be tested. For now, the message from New Delhi is clear: India will trade, but not at the cost of its farmers.