The air today in New Delhi is thick with a rare mix of relief, reckoning and caution. Washington’s decision to slash tariffs on Indian goods from a steep 50% to one of the lowest,18%, is being hailed by the Sensex as a victory and by the opposition as a surrender. It’s not just the tariff cut, even the culmination of the much-awaited trade deal is a big sign of relief for Indian economy and the businesses.
However, experts have pointed out that several areas of the deal remain unannounced, which could be a setback for some sectors, especially Indian energy and agriculture.
While the official documents are yet to be finalised, the 18% tariff cut is being seen as a major boost for India’s textile and jewellery sectors. Experts, however, warn that agriculture could emerge as the “sacrificial lamb” of the deal.
Earlier tariffs led to a clear drop in India’s exports to the US. Exports fell from $6.86 billion in August to $6.30 billion in October. At the same time, imports from the US rose from $3.60 billion in August to $4.84 billion in October.
‘Caution, not celebration is warranted’: The ‘Zero Tariff’ to hit India’s agriculture sector
Trump’s remarks suggest that to secure the 18% tariff rate, India may have to make concessions that could have a big impact on Indian farmers. In his announcement, President Trump said that India has agreed to move its tariffs and non-tariff barriers on US goods toward zero. (Trump has not specified which sectors would be covered under the proposed move.) Currently, India has some of the highest agricultural tariffs in the world, such as 150% on alcoholic beverages and 100% on many fruits and vegetables.
If India follows through on this “move to zero,” domestic markets could be flooded with cheap, subsidised US farm products like corn (maize), soybean oil, and dairy products that small-scale Indian farmers may struggle to compete with on price.
A leading think tank is warning that people should be careful before celebrating the deal. According to Ajay Srivastava, the founder of GTRI, “India has previously resisted opening sensitive sectors such as food grains, genetically modified products, and other regulated imports.”
He added, “Until there is a joint statement, negotiated text, and clarity on enforceability, this should be treated as a political signal—not a concluded trade deal. Caution, not celebration, is warranted,” he warned.
US Agriculture Secy sees big win for US farmers
Earlier, in a post on X, the US Agriculture Secretary made it very clear who wins here. She thanked Trump for a deal that will “export more American farm products to India’s massive market… pumping cash into rural America.” This likely confirms that the US sees this deal as a way to wipe out its $1.3 billion agricultural trade deficit with India.
The Trump-announced deal includes a big commitment by India to buy American products, with agriculture, energy, and technology listed as key areas. Higher imports of US almonds, walnuts, and apples could directly affect farmers in regions with climates similar to California, like Himachal Pradesh and Kashmir. The US has long sought access to India’s dairy and poultry markets. If India relaxes rules on GM-free certification or cultural requirements, it could impact the livelihoods of millions of small-scale dairy farmers.
Yogendra Yadav asked, “Has our Govt opened the door for US agriculture imports? Has the Modi government knelt before Trump and opened the doors for American exports in the agriculture sector? The Govt must come clean in the parliament. The farmers demand answers!”
US gains market access, but details remain murky
The latest US‑India trade announcement points to a clear win for American exporters, but the fine print is still hazy. According to Richard Rossow, senior advisor at CSIS, both countries appear to have agreed on better US market access in India, including dropping non-tariff barriers and removing most of the tariffs the US had imposed. Yet, as Rossow notes, “what we don’t know is what other things were included.”
Rossow notes that while India is opening up, staple grains (wheat and rice) likely remain a “redline.” India cannot afford to jeopardise its food security or the politically sensitive “minimum support price” (MSP) system for these crops. For India, certain staple grains are a no-go… For the US, the question was whether this was a negotiating tactic or a real red line. We will see that staple grains grown in India were likely excluded from the market…,” he told ANI.
Rossow questions whether the “move to zero” is a long-term promise or a specific commitment. If it’s the latter, the Indian government will face immense pressure from farmer unions.
India gains advantage over regional competitors
Looking at the positive side, with the new tariff structure, India now enjoys a clear advantage over several competing export economies. Its 18 per cent rate is lower than tariffs faced by Indonesia, Bangladesh, and Vietnam. Compared to China and Pakistan, India now has a much lower tariff.
The reduction in tariffs could also make India more attractive as a manufacturing hub. At 18%, India’s tariff rate is lower than Vietnam’s 20% and most of Southeast Asia’s 19%.
Indian stocks are showing signs of life after a long-awaited trade agreement with the United States. The deal removes a major roadblock that had triggered record foreign fund outflows, giving both equities and the rupee a boost. On Tuesday, the NSE Nifty 50 Index rallied as much as 5% before settling with gains of 2.8%.
The rupee rose by up to 1.2% against the US dollar, marking its biggest one-day jump in over three years. The rupee weakened 2% in January, prompting concern over central-bank intervention. On Monday, before the deal was announced, the rupee became the best-performing emerging-market currency, aided by RBI support.
Foreign funds return?
Global investors have sold $3.2 billion of Indian stocks this year, adding to a record $18.8 billion outflow last year. According to Bloomberg, after lagging behind other rising markets by over 30 percentage points, India’s position in the MSCI Emerging Markets Index dropped below South Korea’s for the first time since December 2021. Despite this, Indian equities had already shown early signs of recovery. On Monday, the Nifty climbed 1.1%, even as most Asian markets fell.