High-Stakes Trade War Looms as India Refuses US Demands on Food Imports

With barely two weeks to go before a make-or-break July 9 deadline, India and the United States are engaged in strained last-minute talks over a proposed Bilateral Trade Agreement (BTA). Although both nations have indicated a desire to sign an agreement, deep policy chasms—particularly on farm trade—risk derailing the negotiations.

New Delhi is not budging from defending its national interest; it has made it explicit that it will not give way to American pressure on issues like reduced import tariffs on US dairy and agricultural produce and access to the market for GMO crops, the senior Indian government sources said.

“India is not willing to budge on GMO crops or offer wide-based access to US agriculture and dairy products,” a senior official said, attributing this to long-term issues of food security, environmental protection, and livelihoods for Indian farmers.

The United States, for its part, is working hard to utilize India’s huge consumer market for farm shipments. US negotiators contend that India’s market opening is a necessity for their domestic agri-sector, but Indian authorities warn that this could destabilize India’s farm economy and food regulation system.

With the 90-day tariff hiatus expiring on July 9, time is of the essence. Unless there is a deal by then, tariffs will return to pre-April 2 levels, and tensions could flare into a full-blown trade war once again between the two nations. That might increase American exporters’ costs, but Indian negotiators are confident that the country is better equipped than most to take the hit, considering its manufacturing competitive advantage.

Despite the sharp differences, both sides continue to engage intensively. Negotiators are working round-the-clock to find a “middle ground” that respects India’s red lines while offering the US enough economic incentive.

Trade analysts caution that the failure to seal the deal could hurt the overall Indo-US strategic and economic relationship, particularly in the face of changing global trade realignments. For India, the BTA negotiations are a challenge to its capacity for strategic autonomy while still constructively engaging a great global power.