Do the deal

Trade deal is in farmers’ interest. Boost to manufacturing will create factory jobs, reduce pressure on farming

India has eight more days to close a trade deal with Trump. A delay would be costly because US is India’s largest trading partner, absorbing 18% of goods exports. Without a deal, the tariff on those goods will jump from 10% to 26%, making them costlier. US also needs a deal to crack the Indian market, and right its balance of trade. It produces mountains of soy, wheat, corn and apples that China doesn’t want anymore. So, the interest is mutual. Last week, Trump hinted a deal was imminent: “We have one coming up, maybe with India. Very big one.” FM Sitharaman responded: “Yes, we would love to have an agreement, a big, good, beautiful one; why not?”

But there are sticking points. India has 650mn people in farming – almost twice America’s population – to worry about. Most of them are poor, accounting for just 18% of GDP. Easing tariffs on agriculture and dairy would hit them hard. The US demand for access to GM crops is reportedly another red line for India. Reports indicate GOI is keen to not cede ground on the question of farm tariffs. But not having a deal may be costlier long-term.

For one, 10% tariff is better than 26% when you are competing against the Chinese, who are tariffed at 30% by US. A trade deal would also make India competitive vis-à-vis other low-cost producers like Vietnam and Bangladesh. It would spur foreign investment in Indian manufacturing. But the benefits go beyond economics. Given Trump’s autocratic style, an overly rigid Indian stance would affect US-India engagement in areas like defence. That’s why other countries have been quick to make concessions. Canada, for example, dropped its digital services tax on Sunday, after Trump made it a pretext for cancelling trade talks.

India has played its cards well so far. Budget 2025 made concessions for US automobile and other imports to soften Trump before he announced tariffs. Modi had a fruitful meeting with him in Feb. Both sides are keen to boost bilateral trade to $500bn by 2030. The momentum must not be squandered. Marginal farmers need protection, but their interests might be better served with a post-deal manufacturing boom that creates factory jobs. The alternative – fewer factory jobs, sans a deal – will only increase the pressure on farming.

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