What Happened
- The Congress party criticised the India-US interim trade agreement in Parliament, calling it an "abject failure" of economic diplomacy and alleging the deal disproportionately favours the United States.
- Congress president and Leader of Opposition in Rajya Sabha Mallikarjun Kharge warned of a "farm laws-type agitation," arguing the deal would harm Indian farmers and dairy producers by opening markets to US agricultural imports including genetically modified animal feed (DDGs and red sorghum).
- Kharge highlighted the tariff asymmetry: India's exports to the US face an 18% reciprocal tariff while US imports into India would attract zero or reduced duties on many product categories.
- Congress general secretary Jairam Ramesh argued the deal lacked transparency, with information about its terms coming from Washington rather than from the Indian government, and that Commerce Minister Piyush Goyal's statement in Parliament provided insufficient detail.
Static Topic Bridges
WTO Most Favoured Nation (MFN) Principle and Bilateral Trade Deals
The MFN principle, enshrined in Article I of the General Agreement on Tariffs and Trade (GATT), requires that any trade advantage granted by one WTO member to another must be extended to all WTO members. This means a country cannot normally give preferential tariff rates to just one trading partner. The key exception is Article XXIV of GATT, which permits the formation of Free Trade Areas (FTAs) and customs unions, provided they cover "substantially all the trade" between the parties and do not raise barriers against non-parties.
- Article XXIV:5(c) of GATT permits "interim agreements" as stepping stones toward a full FTA, but requires a plan and schedule for completion within a "reasonable length of time" (generally not exceeding 10 years)
- Article XXIV:8(b) requires FTAs to eliminate duties and restrictive regulations on "substantially all the trade" between members
- India's simple average MFN applied tariff is 16.2% overall; 36.7% for agricultural products and 13.0% for non-agricultural products (WTO, 2024)
- The US simple average MFN applied tariff is approximately 3.3% (WTO, 2024)
- Any interim agreement must be notified to the WTO Council for Trade in Goods and examined by a working party
Connection to this news: The India-US interim trade framework is being structured as an "interim agreement" under Article XXIV of GATT, serving as a precursor to a full Bilateral Trade Agreement (BTA). The opposition's criticism centres on whether this interim framework adequately protects Indian interests given the asymmetry in existing tariff structures between the two countries.
India-US Bilateral Trade Statistics and Trade Deficit
The United States has been India's largest trading partner for four consecutive years. In FY 2024-25, bilateral goods trade reached $131.84 billion. India enjoys a significant trade surplus with the US, which is a key driver of US demands for greater market access. From India's perspective, exports to the US were $86.51 billion while imports from the US were $45.33 billion in FY 2024-25.
- India's trade surplus with the US: approximately $41.18 billion in FY 2024-25 (from India's data)
- US goods trade deficit with India: $45.8 billion in 2024 (from US Census data; methodological differences explain the gap)
- India's exports to the US grew 11.6% in FY 2024-25 over the previous year
- Key Indian exports to US: pharmaceuticals, IT services, gems and diamonds, textiles
- Key US exports to India: crude oil, LNG, aircraft and parts, machinery, medical devices
- US-India services trade totalled approximately $83.4 billion in 2024
Connection to this news: The trade deficit is the primary US motivation for pressing India for lower tariffs and greater market access. The opposition's argument that the deal is "one-sided" relates to their assessment that India has conceded more than it gained, given India already runs a surplus.
India's Agricultural Import Policy and Pulse Import Regime
India uses a combination of tariffs, quantitative restrictions, and licensing to regulate agricultural imports, reflecting the political sensitivity of farm sector protection. Pulses are particularly significant as India is both the world's largest producer and consumer of pulses, yet also a major importer to bridge domestic shortfalls. The government uses variable duty structures to balance consumer price stability with farmer income protection.
- India currently allows duty-free import of tur (arhar) and urad dal until March 31, 2026
- Masoor dal import attracts 10% duty (5% basic customs duty + 5% Agriculture Infrastructure and Development Cess)
- Yellow peas attracted 30% import duty from November 1, 2025 after farmer groups protested price pressure from cheap imports
- India imported an estimated 6.63 million tonnes of pulses in 2024, double the 3.31 million tonnes in 2023
- Budget 2025-26 announced a 6-year mission for tur, urad, and masoor with Rs 1,000 crore allocation for MSP-based procurement
- The Commission for Agricultural Costs and Prices (CACP) recommends MSP; the Cabinet approves it
Connection to this news: The original White House factsheet included "certain pulses" in the list of agricultural products for tariff reduction, which was subsequently removed after India flagged it. The opposition raised this as evidence that the government almost conceded on a politically sensitive category that directly affects millions of pulse farmers.
Reciprocal Tariffs and the IEEPA-Based Trade Actions
In 2025-26, the United States imposed multiple layers of tariffs on Indian goods using executive authority under the International Emergency Economic Powers Act (IEEPA) and the reciprocal tariff framework. This represented a significant escalation in US trade policy, departing from traditional tariff-setting through Congressional legislation or WTO-compliant safeguard mechanisms.
- April 2, 2025: US announced India-specific reciprocal tariff of 26% (base 10% + India-specific 16%)
- July 30, 2025: Reciprocal tariff raised to 25% for India
- August 27, 2025: An additional 25% IEEPA-based tariff imposed on India for purchasing Russian oil, bringing cumulative tariff to 50%
- February 6-7, 2026: Under the interim deal, US reduced reciprocal tariff to 18% and rescinded the 25% IEEPA tariff (conditioned on India halting Russian oil imports)
- The IEEPA tariff is reimposable if India resumes Russian oil purchases
Connection to this news: The opposition's core argument is that even after the deal, Indian exports face an 18% tariff while the US gains significant market access into India at reduced or zero tariffs. The conditionality linked to Russian oil imports adds a foreign policy dimension that constrains India's energy security options.
Key Facts & Data
- US reciprocal tariff on India: reduced from 25% (plus 25% IEEPA penalty) to 18% under the interim deal
- India's trade surplus with US: approximately $41 billion (FY 2024-25)
- Total India-US bilateral goods trade: $131.84 billion (FY 2024-25)
- India's $500 billion purchase commitment: covers US energy, ICT, coal, and other products (language softened from "committed" to "intends" in revised factsheet)
- India's simple average MFN applied tariff: 16.2% overall; 36.7% for agricultural products (WTO, 2024)
- India's pulse imports: 6.63 million tonnes in 2024 (up from 3.31 million tonnes in 2023)
- Agricultural products India agreed to reduce tariffs on: DDGs, red sorghum, tree nuts, fresh and processed fruit, soybean oil, wine and spirits
- Protected categories (per India's Commerce Minister): maize, wheat, rice, ethanol, tobacco, and some vegetables