The patience of Narendra Modi govt seems to have paid. The US-India joint statement issued by the White House on Feb 6 gives some relief. It indicates what is likely to come in the trade deal. It is still an ‘interim agreement’ and there is no explicit mention that India will stop buying crude oil from Russia. More details will be known only when final agreement is reached sometime in March. But this joint statement surely shows convergence of interests between the two countries, and my preliminary research shows that it is likely to be mutually beneficial.Here are some of the details, which indicate that the trade deal is likely to be fair to both sides. The big gain is obviously to come from massive drop in import duties by the US from 50% to 18%. This will benefit immensely India’s labour-intensive sectors, especially textiles and apparel, leather goods, gems and jewellery, and even agriculture. In the absence of this deal, there could have been a major loss in India’s exports to the US in 2026. If you want to gauge its impact on the ground, talk to any apparel exporter in Tirupur or diamond exporter in Surat or shrimp exporters in Andhra Pradesh. They are heaving a big sigh of relief and celebrating. Indian exporters can now compete very well with their competitors, be it Bangladesh or Vietnam, which attract 20% duty, and India will be at a big advantage vis-a-vis China if the import duty on China’s exports to the US remains at 35% or so.India has shown its ‘intent’ to buy lot of energy products, aeroplanes, and high-tech equipment from the US, which may be totalling roughly $500 billion over the next five years. So, there is some clarity on this front too. There has been lot of concern in India over the agriculture imports. The joint statement clearly states, “India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soyabean oil, wine and spirits, and additional products.“The point to note is that there is no explicit mention of corn or soyabean, which are GMO (genetically modified organisms) products and about which India was concerned, although India’s own cotton seed is a GM product. However, soyabean oil is there, which has been coming in any case from the US. The real new area is DDGs (distillers dried grains), which are in crushed form and it can be soyabean, corn, or any other grain, which are basically co-product of ethanol and used as poultry feed. India has been using its own grains (primarily corn and rice) for ethanol. There could be some substitution there with Indian DDG for feed, provided imported ones are cheaper. That will help India’s poultry become more competitive.Tree nuts and berries have been of great interest to the US. Their biggest agri-export of the US to India has been almonds. Almost 90% of almonds being sold in India are from the US. They attract a duty of Rs 42/kg, which in ad valorem terms works out to roughly 10% of import value. But walnuts attract 120% duty currently, which is likely to be slashed to somewhere near almonds. Similar would be the case with pistachios, pecans, cranberries, blue berries, etc. Their import duties are likely to be brought down to within the range of 10-15%.Duty on cotton imports, which is at 5%, may be down to zero. Story of cotton is interesting. Prime Minister Atal Bihari Vajpayee had taken a bold decision in 2002 to allow the first GM crop, Bt cotton. The production of cotton jumped from roughly 13 million bales in 2002-03 to 39 million bales by 2012-13, making India the largest producer of cotton and second largest exporter of cotton. But then around 2014-15, we started messing up with this gene revolution by cutting down the trait fee to the company that had IPR of Bt cotton. As a result, that company walked away, and India could not get the successive fourth generation technology in cotton seeds. In 2024-25, India became a net importer of cotton and its production dropped to 29 million bales. Lesson is very clear: Either we invest in our own agri R&D or buy the best technologies from abroad. Our agri R&D budget of ICAR is about $1.1 billion for all crops, while Bayer, which has the best cotton seeds technology today, is investing euros 2.6 billion in 2024. India needs to heed the advice of PM Vajpayee who once said what IT (information technology) is for India, BT (biotechnology) is for Bharat. Gene editing is likely to be the future of agriculture, and India needs to invest in it for greater competitiveness.(Gulati is Distinguished Professor at ICRIER. Views are personal)
