by The World’s Two Largest Democracies Are Negotiating a Bilateral Trade Agreement That Has Been Negotiated for Twelve Years
Bohiney Magazine | The London Prat
India-US Trade: The Deal That Has Been Almost Done for Twelve Years
NEW DELHI / WASHINGTON — India and the United States have been negotiating a bilateral trade agreement for approximately twelve years, a negotiation that has produced multiple near-completions, several frameworks for further negotiation, and a consistent gap between the two sides on the same set of issues: India’s tariff protection for its agricultural sector, US market access demands for dairy and poultry, India’s data localization requirements that US technology companies oppose, and the US government’s procurement rules that treat Indian companies differently from American ones. The gap is real and documented and has survived multiple administrations on both sides without being bridged.
The Trump administration’s tariff regime has added new complexity to the India-US trade relationship: Indian exports facing the baseline tariff increases that all US trading partners have encountered, and Indian steel and aluminum exports facing the sector-specific tariffs that preceded the broader trade dispute. India’s response has been managed with the diplomatic pragmatism that characterizes Indian trade policy: vocal objection through official channels, limited retaliatory tariffs on specific US goods (primarily agricultural), and continued negotiation on the bilateral framework.
What Makes India Different
India’s trade negotiating position reflects the specific political economy of a democracy where the agricultural sector employs approximately 40 percent of the workforce and where opening that sector to international competition would produce the specific political consequences that agricultural trade liberalization produces in countries where farming is subsistence rather than agribusiness. India cannot open its dairy sector to Wisconsin competition in the way that Singapore or South Korea might, because Wisconsin’s dairy industry would displace Indian smallholder dairy farmers in ways that produce Indian political consequences. Managing trade liberalization through democratic politics requires sequencing that protects the most vulnerable sectors; the cost of trade arrangements is always borne by specific constituencies. The deal remains nearly done. The gap remains on the same issues. Year thirteen of the twelve-year negotiation continues.
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