What Happened
- Commerce and Industry Minister Piyush Goyal informed the Lok Sabha that India's sensitive sectors including agriculture, dairy, poultry, and key manufacturing sectors are fully safeguarded under the India-US interim trade framework announced on 7 February 2026.
- Goyal described the deal as a "labour of love" and dismissed claims of sovereignty loss as "absolute nonsense," asserting that no concessions have been made on sensitive farm and food products.
- The deal excludes tariff reductions on meat, poultry, GM foods, soya meal, corn, maize, rice, wheat, millets, sugar, domestically produced fruits, pulses, oilseeds, animal feed, groundnuts, honey, dairy, non-alcoholic beverages, flour, starch, essential oils, fuel ethanol, and tobacco.
- Goyal highlighted new export opportunities for Indian products including Basmati rice, tea, marine products, and cotton textiles that the deal would create.
- The US reduced its reciprocal tariff on India from 25% to 18%, while India opened market access on select agricultural products (DDGS, tree nuts, soybean oil, wine, fruits) and all US industrial goods.
Static Topic Bridges
India's Reciprocal Tariff Landscape and Trade Policy Evolution
India has historically maintained higher average tariff rates than most developed economies, reflecting its development strategy of protecting domestic industries. India's simple average MFN applied tariff stands at approximately 17-18% across all goods, significantly higher than the US average of around 3-4%. Under the Trump administration, the US adopted a "reciprocal tariff" policy explicitly calibrating duties on each partner based on perceived tariff asymmetry and bilateral trade deficits.
- India's simple average MFN applied tariff: ~17-18% (all goods)
- India's average applied agricultural tariff (trade-weighted): ~32.8%
- US simple average MFN applied tariff: ~3-4%
- India's WTO-bound agricultural tariff ceiling: ~113.5%
- US reciprocal tariff on India: reduced from 25% to 18% under the deal
- Comparative US reciprocal tariffs: China 35%, EU 20%, Bangladesh 20%, Vietnam 20%
- India's trade policy instruments: customs duty, anti-dumping duty, safeguard duty, countervailing duty
Connection to this news: The 18% reciprocal tariff achieved by India is the lowest among major US trading partners with a bilateral trade deficit, giving Indian exporters a significant competitive advantage in the US market, particularly in textiles, leather, pharmaceuticals, and IT services.
Parliament's Role in Trade Agreements Under the Indian Constitution
Unlike many democracies where trade agreements require explicit legislative ratification, India's Constitution does not mandate parliamentary approval for trade treaties. The executive branch (through the Commerce Ministry) negotiates and concludes trade agreements under Article 73 (executive power extending to matters on which Parliament has the power to make laws) and Article 253 (power to implement international agreements through legislation).
- Article 246, Entry 83 of Union List: trade and commerce with foreign countries, import and export across customs frontiers
- Article 253: Parliament may legislate to implement any treaty, agreement or convention
- Article 73: Executive power of the Union extends to all matters in the Union List
- No constitutional requirement for prior parliamentary approval of trade agreements
- Convention: Commerce Minister typically makes a statement in Parliament on major trade agreements
- Standing Committee on Commerce can examine trade agreements but its recommendations are advisory
Connection to this news: Goyal's statement in the Lok Sabha, while not constitutionally required for the deal's validity, served the important political function of addressing opposition concerns and farmer anxiety about agricultural concessions. Parliament's oversight role through questions and debates remains the primary accountability mechanism for trade policy decisions.
India's Agricultural Export Potential and Trade Surplus in Farm Products
India is among the world's top ten agricultural exporters, with agricultural exports valued at approximately $50-53 billion in FY 2024-25. Key export commodities include marine products, Basmati rice, spices, tea, coffee, and cotton textiles. Agricultural exports have grown significantly from approximately $18 billion in FY 2013-14.
- Agricultural export value (FY 2024-25): approximately $50-53 billion
- Top agricultural exports: marine products, Basmati rice, spices, sugar, tea, coffee, cotton
- Agricultural and Processed Food Products Export Development Authority (APEDA) oversees export promotion
- India's share of global agricultural trade: approximately 2.5%
- Organic food exports have grown at 15-20% CAGR over the past five years
- Target markets for Indian agricultural exports: Middle East, Southeast Asia, US, EU
Connection to this news: Goyal's emphasis on new export opportunities for Basmati rice, tea, marine products, and cotton textiles under the deal frames the agreement as a net positive for Indian farmers. The deal's structure attempts to protect import-sensitive products while leveraging India's agricultural export strengths in the US market.
Key Facts & Data
- Products excluded from tariff cuts: dairy, poultry, meat, GM foods, rice, wheat, millets, sugar, pulses, oilseeds, corn, maize, groundnuts, honey, ethanol, tobacco, and more
- New Indian export opportunities: Basmati rice, tea, marine products, cotton textiles
- US reciprocal tariff on India: 25% reduced to 18%
- India's tariff advantage over competitors in US market: China (35%), Bangladesh (20%), Vietnam (20%)
- India-US bilateral goods trade (2024): $128.9 billion total
- US goods trade deficit with India (2024): $45.8 billion
- India's $500 billion five-year purchase commitment: energy, technology, aircraft, precious metals, coal
- India's agricultural export value (FY 2024-25): approximately $50-53 billion