NITI Aayog suggests ‘dual-track approach’ in India-US trade, amid reciprocal tariff

The Aayog, in a working paper titled 'Promoting India-US Agricultural Trade Under the New US Trade Regime', said that India's agricultural sector needs safeguards to ensure price stability for both producers and consumers against excessive volatility in international markets

New Delhi: In the aftermath of ‘reciprocal tariffs’ by the US, India should adopt dual-track approach and selectively reduce high tariffs on non-sensitive agricultural commodities imports from Washington, while also strategically offer concessions where domestic supply gaps exist, a NITI Aayog working paper has said.

The Aayog, in a working paper titled ‘Promoting India-US Agricultural Trade Under the New US Trade Regime’, said that India’s agricultural sector needs safeguards to ensure price stability for both producers and consumers against excessive volatility in international markets.

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“A dual-track approach is essential now. In the short term, India should consider selectively reducing high tariffs on non-sensitive imports and negotiate non-tariff safeguards on vulnerable segments such as poultry,” the paper said.

It noted that sudden announcement of “reciprocal tariffs” and enhanced market access for US exports following re-election of Donald Trump as President of the United States in January 2025 has sent shock waves across the world, especially among the trading partners of US.

“India can also strategically offer concessions where domestic supply gaps exist, such as in edible oils and nuts,” the paper suggested. Noting that India is the largest importer of edible oil in the world and the US has a huge export surplus of soybean, which is GM, the paper said India can offer some concession to the US in import of soybean oil to meet demands in that country and reduce trade imbalance, without harming domestic production.

The paper also suggested that India should negotiate more access to the US market for high-performing exports like shrimp, fish, spices, rice, tea, coffee, and rubber. India earns approximately USD 5.75 billion annually from agri-exports to the US. Expanding this through duty waivers or TRQs should be part of trade talks.

Alongside strategic trade management, it said India must undertake medium-term structural reforms to improve the global competitiveness of its farm sector.

“This includes bridging the productivity gap by embracing appropriate technologies, market reforms, private sector participation, improvement in logistics and development of competitive value chains,” it said.

The Indo-US agricultural trade has experienced significant changes and steady growth in the last two decades, signalling deepening bilateral economic ties. The composition of agricultural trade between India and the US revealed that both countries are diversifying their export portfolios.

While traditional items such as frozen shrimp, basmati rice, and spices continue to dominate, there has been a marked increase in the export of processed cereals and other value-added products.

India’s imports from the US remain concentrated in high-value commodities such as almonds, pistachios, and walnuts. India has maintained a surplus in agricultural trade with the USA and this same has increased over time. However, the relative importance of agriculture in the bilateral trade is diminishing.