Potential Impact of the US Agreement

14-Feb-2026 11:32 AM

The interim bilateral trade agreement between India and the United States is considered beneficial for both countries. This means that while India benefits from it, there is also a risk of loss. The Indian agricultural sector is highly sensitive, and even a small adverse impact on it could become a serious problem later.

When the import of edible oils was deregulated in the 1990s, implementing a free market system, it was considered a minor incident, but the subsequent dire consequences are no secret. Today, India remains the world's largest importer of edible oils, importing 16-16.5 million tons annually and costing billions of dollars.

The same is true for pulses, whose imports are projected to reach an all-time high of 7.3 million tons during 2024-25. The government is now worried about record imports of edible oils and pulses and wants to curb them, but the situation has escalated to the point where controlling imports has become extremely difficult, if not impossible. None of the government's initiatives are yielding any meaningful results.

The bilateral trade agreement with the European Union did not cause any uproar because the agricultural sector was excluded from its provisions. However, the agreement with the United States includes many agricultural products.

It is true that India refused to grant any concessions to the United States on rice, wheat, dairy products, poultry products, and GM-grade maize and soybeans, but the United States succeeded in imposing its arbitrary conditions on other products.

It was allowed to export soybean oil, sorghum, DDGS, fresh and processed fruits and dried fruits to India. The United States reduced import duties on Indian products from 50 percent to 18 percent, while India exempted many American products from customs duty.

Now the question is being asked whether 18 percent is too high or zero percent. The matter is quite complicated but we will have to wait to understand the impact and consequences of the agreement.