US, India Rush to Finalize Tariff-Reducing Trade Deal as Disputes Over Dairy and Agriculture Persist
With just days left before a major tariff deadline, the United States and India are working around the clock to finalize an interim
trade deal that could lower tariffs and boost economic ties. However, talks remain stuck on sensitive issues—especially agriculture and dairy—where both sides are refusing to back down.
What’s at Stake?
The US has threatened to raise tariffs on Indian goods to 26% if a deal is not reached by July 9. Currently, a temporary 10% tariff is in place to allow time for negotiations.
Both countries want to avoid these higher tariffs, which would hurt exporters and consumers on both sides.
Key Disagreements
The US is pushing India to open its markets for American farm products, including genetically modified crops and dairy. These are politically sensitive in India, where the dairy sector supports over 80 million people, many of them small farmers.
India has firmly refused to allow more US dairy imports or genetically modified crops, citing risks to food safety and the livelihoods of rural families. “There is no question of conceding on dairy. That’s a red line,” said a senior Indian official.
India also wants the US to lower tariffs on its labor-intensive exports like garments, footwear, and leather, which are important for jobs in India.
Progress and Hopes
Despite the deadlock on agriculture, negotiators have made progress in other areas, such as reducing tariffs on walnuts, cranberries, medical devices, automobiles, and energy products from the US.
Both sides see this interim deal as a first step towards a broader agreement that could double trade to $500 billion by 2030.
Why Is This Important?
The deal is not just about economics. Both countries see it as a way to strengthen their partnership at a time of global uncertainty and competition.
US President Donald Trump has said he is optimistic about reaching a deal that will help American companies compete in India’s vast market of 1.4 billion people.
What Happens Next?
Indian negotiators have extended their stay in Washington, hoping to bridge the gap before the July 9 deadline.
If no deal is reached, tariffs will rise, making many products more expensive and possibly straining relations between the two countries.
As the clock ticks down, both Washington and New Delhi are under pressure to find common ground, without compromising on their core interests. The outcome will affect not just trade, but the broader relationship between two of the world’s largest democracies.
In a move to boost agricultural cooperation, India and Ukraine held their first Joint Working Group meeting on June 18, 2025. Key discussions focused on seeds, food safety, digital tech, and Ukraine’s agricultural exports to India—including apples, meat, and dairy.
India and Ukraine have taken a significant step in strengthening their agri-sector partnership. The first-ever India-Ukraine Joint Working Group on Agriculture met virtually on June 18, 2025, opening new avenues for collaboration in seed production, oilseed cultivation, horticulture, agricultural mechanisation, digital technologies, fisheries, and food safety.
Hosted online, the meeting was co-chaired by Oksana Osmachko, Deputy Minister of Agrarian Policy and Food of Ukraine, and Ajit Kumar Sahu, Director at the Indian Department of Agriculture and Farmers Welfare. The session brought together key representatives from ministries and regulatory bodies of both nations, including India’s FSSAI, Department of Animal Husbandry, and the Ministry of External Affairs.
One of the highlights was the successful delivery of the first trial shipment of Ukrainian apples to India—marking a fresh beginning in Ukraine’s agricultural exports to the Indian market. Both sides discussed future prospects for importing meat and dairy products, showing India’s growing interest in diversifying its agri-import sources.
Ukraine was also invited to participate in World Food India 2025, a major agri-food event to be held in New Delhi from September 25 to 28. This exhibition could open new business doors for Ukrainian agri-companies and give Indian stakeholders access to high-quality Ukrainian produce and technology.
The meeting set the tone for deeper collaboration ahead of the 7th session of the Inter-Governmental Commission (IGC) planned later in 2025. Ukraine welcomed India’s willingness to engage practically in the agri-sector and sees this partnership as critical, especially amid global food supply disruptions and climate challenges.
This new partnership offers a win-win for both nations—India can gain access to Ukraine’s rich agricultural outputs and machinery, while Ukraine taps into one of the world’s largest consumer markets.
Union Agriculture Minister Shivraj Singh Chouhan today affirmed India’s unwavering commitment to safeguarding the interests of its farmers amidst ongoing trade negotiations with the United States. Speaking on the sensitive issue of agricultural market access, Minister Chouhan stated unequivocally that any potential bilateral trade agreement would be finalized only after a meticulous assessment of its gains and losses, with farmer protection as the paramount consideration.
The Minister’s remarks come as negotiators from both nations work towards establishing the framework for the first phase of a bilateral deal, anticipated to be signed by September-October 2025. The United States has been actively pushing for greater market access for its agricultural and horticultural products, including key commodities like corn, soybeans, and animal feed. However, these efforts face significant hurdles due to India’s comparatively high agricultural tariffs, which can range from 39% to 50% on average.
Minister Chouhan underscored that while discussions with the US are ongoing, the fundamental principle guiding India’s stance remains clear: “One thing is clear, we will protect the interest of our farmers. When we talk about two nations, we need to see the overall trade.” This pragmatic approach acknowledges the broader economic relationship while prioritizing the livelihoods of India’s vast rural populace.
According to a report from NITI Aayog, “Promoting India-US Agricultural Trade under the new US Trade Regime,” the agricultural trade balance currently favors India. In the triennium ending 2024, US agricultural and allied product exports to India stood at approximately $2.22 billion, while India’s agricultural exports to the US were significantly higher, at $5.75 billion. India’s main agricultural exports to the US include valuable commodities such as frozen shrimp, basmati rice, spices, and processed cereals.
India’s cautious approach to fully opening its agriculture and dairy markets stems from legitimate concerns about potential backlash from rural communities and the imperative to shield domestic producers from the volatility of global prices. The government aims to strike a balance that fosters international trade while ensuring the stability and prosperity of its agricultural sector, which remains the backbone of its economy and a crucial source of employment.
India is poised for a significant expansion in its global agricultural trade footprint, as highlighted by Abhishek Dev, Chairman of the Agricultural and Processed Food Products Export Development Authority (APEDA). Speaking at the inauguration of Indusfood 2025 in Greater Noida, Dev pointed out that despite being the world’s seventh-largest agri exporter, India currently accounts for a mere 2.4% of the colossal $2 trillion global agriculture trade. He emphatically stated that this modest share represents a “huge opportunity” for Indian exporters to dramatically scale up their operations and presence on the international stage.
India’s agri exports were valued at approximately $50 billion in the 2023-24 fiscal year, and concerted efforts are underway to further elevate this figure in the current fiscal year. Dev emphasized the nation’s strategic pivot towards exporting more value-added products, moving beyond simply trading raw agricultural commodities. This shift aims to capture a larger share of the global market by offering processed and diversified food products. A particular focus is on the organic sector, where India currently holds around 2.5% of the $147 billion global organic market. APEDA has set an ambitious target to quadruple this share over the next five years, building on the steady growth witnessed in organic exports—from $213 million in 2012-13 to nearly $495 million in 2023-24.
Indusfood 2025, a flagship event organized by the Trade Promotion Council of India (TPCI) with vital support from the Department of Commerce, was inaugurated by Union Food Processing Industries Minister Chirag Paswan. The prestigious event has drawn an impressive congregation of over 2,300 exhibitors from 30 countries, alongside 7,500 international buyers and 15,000 domestic buyers and trade visitors, creating a vibrant platform for global food and beverage commerce.
Mohit Singla, Chairman of TPCI, elaborated on the multifaceted goals of Indusfood, stating that it extends beyond merely boosting trade. The event also aims to forge crucial connections between farmers and technology providers, thereby enhancing income opportunities through value addition and direct access to global markets. Singla noted the remarkable growth in international participation, with the exhibitor pavilion nearly doubling in size since last year, boasting strong representation from approximately 30 countries, underscoring the increasing global interest in India’s agricultural and processed food sector.
