India-UK Comprehensive Economic and Trade Agreement (CETA) and Future US Trade Deal
The completion of the India-UK Comprehensive Economic and Trade Agreement (CETA) has set the stage for more complex trade negotiations with the United States. However, significant challenges remain, particularly in the agricultural sector.
Challenges in US-India Trade Deal
- Agricultural Market Access
- India is hesitant to open its market to US agricultural products like soyabean, corn, ethanol, and dairy.
- Despite this, India risks losing out as its agricultural exports to the US were valued at $6.2 billion in 2024, with imports at $2.4 billion.
- Impact of Reciprocal Tariffs
- The US's proposed tariffs could be as high as 26% post-August 1 deadline.
- Such tariffs could severely impact Indian seafood exports, valued at $2.5 billion.
- Perception vs. Reality
- US is not a major exporter of dairy products compared to New Zealand and the EU.
- India's soyabean oil imports from the US are minimal compared to Argentina and Brazil.
- Corn imports could benefit Indian dairy and poultry sectors due to competitive pricing and increasing demand despite the US being its largest producer.
Strategic Trade Policy Recommendations
- India should focus on a trade policy that expands and diversifies exports rather than import protection.
- Significant growth in agricultural exports was witnessed from $7.5 billion in 2003-04 to $43.3 billion in 2013-14.
- Current exports are stagnating around $52 billion in 2024-25 due to frequent shipment restrictions.
Success of CETA
- India secured duty-free access to the UK for seafood, processed foods, spices, fruit, and vegetables.
- India offered tariff reductions on UK imports such as whisky, chocolates, soft drinks, and salmon.
A similar proactive, export-oriented strategy rather than a defensive, import-focused approach is recommended for future trade negotiations, including with the US.
