This week, Donald Trump stated that the main topic of discussion in his meeting with Narendra Modi was trade.
Modi has given assurances that India will limit its oil purchases from Russia.Following the US imposition of sanctions on leading Russian oil producers, refineries in India have announced they are prepared to significantly cut back on purchases of cheap Russian oil — signaling that a major hurdle in the US-India trade deal could be removed.
Why does India want a deal with the US?
India faces tariffs of up to approximately 50% on its exports to the US. Half of these tariffs are punitive in nature, targeting purchases of Russian oil.
Sectors employing millions of people, such as textiles, jewelry, seafood, leather, and engineering products, are under pressure.Some sources indicate that the US may offer to reduce tariffs on goods imported from India from 50% to 15-16%; however, this agreement depends on India making some concessions in the energy and agriculture sectors.
What does the US want from India?
Corn and soybeans stand out among the issues. The US wants to sell these products to India. India, on the other hand, tends to increase ethanol production from corn, but has strict rules against production from imported grains and genetically modified (GM) food products. The US, on the other hand, argues that India should be allowed to import corn and that ethanol produced from US corn would only be used to mix with gasoline and would not enter the food chain. Why is it important for the US to focus on exporting these products? US soybean producers are facing significant difficulties due to reciprocal tariffs imposed with China. The US prioritizes the Indian market to reduce these excess stocks. India also has the world’s largest cattle population, and the US wants to export soybean meal (animal feed) to this large market.
Is India willing to accept such imports?
The New Delhi government is currently cautious about proposals to open access to American grains and dairy products — out of concern for protecting the livelihoods of small farmers. However, trade and industry sources say India may open the door to some corn and soybean meal imports. India’s soybean industry, however, opposes these imports; It is claimed that the country’s own producers will suffer and that there is already a surplus of feed.
On the other hand, in India, where corn production capacity exceeds consumption, there are concerns that imports could disrupt the ethanol supply chain in particular. Furthermore, the backlash from many farmers before the local elections in the eastern state of Bihar is seen as a potential risk.
