The United States (US) is expected to seek increased market access in India’s agriculture, dairy, ethanol, and medical device sectors as part of the proposed bilateral trade agreement (BTA). The agreement, set to be finalized within eight months, may also lead to discussions on tariff reductions for key products.
The United States (US) is expected to request greater market access from India in agriculture, dairy products, ethanol, and medical devices as part of the upcoming bilateral trade agreement (BTA). The agreement, which both nations aim to finalize within the next eight months, could lead to discussions on tariff reductions and trade barriers.
A former senior official from India’s Commerce Ministry, who was involved in past trade negotiations with the Donald Trump administration, noted that the US would demand significant concessions in these sectors. According to the official, the US will not be satisfied with limited tariff cuts on motorcycles and bourbon whiskey. Instead, India should push for reduced tariffs on labor-intensive products such as textiles, leather, and gems and jewelry, bringing them down from the current 5-7% to zero.
The Office of the United States Trade Representative (USTR) highlighted in its 2024 National Trade Estimate Report that India imposes restrictions on ethanol imports for fuel use despite ambitious domestic blending targets. The Directorate General of Foreign Trade (DGFT) has limited biofuel imports to actual users, requiring import licenses for ethanol. The US sees these restrictions as a major trade barrier.
A White House factsheet released on February 16, 2025, emphasized the lack of reciprocity in trade, stating that while the US has an average Most Favored Nation (MFN) tariff of 5% on agricultural goods, India imposes an average MFN tariff of 39%. The factsheet also pointed out significant tariff imbalances in sectors like ethanol and motorcycles, where India charges a 100% tariff on US motorcycles, while the US imposes only a 2.4% tariff on Indian motorcycles.
Additionally, the US is concerned about Brazil’s tariff on American ethanol exports, which stands at 18%, compared to the 2.5% US tariff on ethanol imports. In 2024, the US imported over $200 million worth of ethanol from Brazil while exporting only $52 million to the country.
With trade negotiations progressing, India and the US will need to balance their respective demands to ensure a mutually beneficial agreement under the proposed BTA.
