What Happened
- A senior US official stated that a bilateral trade deal between India and the United States is "not far off" but acknowledged that significant gaps remain, particularly around agricultural market access.
- One of the key sticking points is pulses — India wants to protect its domestic market for this commodity while the US is seeking greater access for its pulse exports.
- The India-US Bilateral Trade Agreement (BTA) negotiations were formally launched in February 2025, with both sides targeting to more than double bilateral trade to $500 billion by 2030.
- In February 2026, an interim framework reduced the punitive 25% tariff on Indian goods, bringing US reciprocal tariffs down from 25% to 18%, but a comprehensive deal remains pending.
- The White House revised an earlier factsheet on the deal to drop the claim that India would reduce tariffs on certain pulses — reflecting the sensitivity of agricultural concessions.
- India has not included major agricultural commodities in any free trade agreement so far, given that agriculture employs a majority of its workforce.
Static Topic Bridges
India-US Trade Relations: Historical Trajectory
India and the United States share one of the world's largest bilateral trade relationships, but it has been consistently marked by friction over agricultural tariffs and non-tariff barriers. India's average applied tariff is approximately 17% — among the highest for any major economy — compared to just 3.3% for the US. For agricultural goods specifically, India's average applied tariff stands at around 39%, against the US average of just 5%.
- The US-India Trade Policy Forum, revived during the Biden era, laid groundwork for BTA negotiations formally launched in February 2025.
- India has historically resisted agricultural liberalisation in trade agreements, including in WTO negotiations (Doha Round breakdown partly on food security safeguards).
- Bilateral trade currently stands at approximately $190 billion annually (goods and services combined).
- The BTA negotiations cover tariffs, non-tariff barriers, intellectual property, and digital trade.
Connection to this news: The persistence of the pulses dispute illustrates the structural difficulty in India-US trade negotiations — domestic farm lobbies on both sides make agricultural concessions politically costly, causing the deal timeline to slip even as both governments express optimism.
Food Security and Agricultural Protectionism in India
India's protectionist stance on agriculture is rooted in both economic necessity and political economy. Over 40% of India's workforce is engaged in agriculture, and commodities like pulses are a critical source of protein for hundreds of millions of people. Pulses (dal) are among the most consumed foods across income groups and feature prominently in the Public Distribution System (PDS).
- India is both the world's largest producer and the largest consumer of pulses (lentils, chickpeas, pigeon peas, etc.), accounting for about 25% of global production.
- India also imports pulses — particularly lentils and yellow peas — mainly from Canada and Australia, to meet demand shortfalls.
- The US produces yellow peas, lentils, and chickpeas primarily in the northern plains and wants duty-free access to the Indian market.
- India imposes high tariffs (as much as 30-50%) on select pulse imports to protect domestic farmers; sudden liberalisation could undermine farm incomes.
Connection to this news: US demand for greater pulse market access directly conflicts with India's domestic agricultural protection framework. Any concession on pulses requires careful political management and is not simply a technical trade-negotiation matter.
WTO and Multilateral Trade Framework
The World Trade Organization (WTO) provides the multilateral framework within which bilateral deals like the India-US BTA must operate. The Agreement on Agriculture (AoA) under WTO sets rules on domestic support, export subsidies, and market access. India has consistently invoked its right to use subsidies and tariffs to ensure food security, a position formalised through the "peace clause" agreed at Bali (2013) and Nairobi (2015).
- The WTO's "special safeguard mechanism" allows developing countries to raise tariffs temporarily when import surges or price falls threaten farmers.
- India's food subsidy programme (under NFSA, 2013) has been a recurring subject of WTO disputes.
- Bilateral trade deals must be notified to the WTO under GATT Article XXIV (for goods) and must liberalise "substantially all trade."
- Any India-US BTA that excludes large agricultural categories could face WTO scrutiny.
Connection to this news: The "gap" on pulses is not merely bilateral — it is embedded in India's wider defensive posture at the WTO on agriculture, making a breakthrough contingent on both parties finding face-saving formulations that protect domestic political interests.
Key Facts & Data
- India-US bilateral trade target: $500 billion by 2030 (from ~$190 billion currently)
- India's average applied tariff on agricultural goods: ~39% (US: ~5%)
- BTA negotiations formally launched: February 13, 2025 (Modi-Trump meeting in Washington)
- February 2026 interim deal: US reduced reciprocal tariffs from 25% to 18% on Indian goods
- India is the world's largest producer of pulses (~25% of global output)
- Pulses excluded from major liberalisation: wheat, rice, millets, corn, dairy, and poultry also remain protected under India's current negotiating stance
- White House revised its factsheet to remove claim that India agreed to reduce pulse tariffs, indicating Indian resistance held