Agriculture a stumbling block in talks, but India-US trade in sector sees surge

By | August 7, 2025
India US agricultural trade cargo shipment in 2025

In the complex world of international trade, agriculture often finds itself at the center of contention. The India–U.S. relationship is no exception. While negotiators from both nations have spent years attempting to iron out a comprehensive trade agreement, the agriculture sector remains a major obstacle. Ironically, even as talks remain stalled, bilateral agricultural trade between the two countries is flourishing at record levels.

A Booming Agri Trade Amid Deadlock

In the first half of 2025, India’s imports of agricultural products from the United States rose by 49.1%, reaching $1.69 billion, compared to $1.13 billion during the same period in 2024. At the same time, Indian agri-exports to the U.S. surged by 24.1%, climbing from $2.79 billion to $3.47 billion, according to recent government data.

This unexpected boom is taking place against the backdrop of heightened trade tensions, particularly surrounding India’s reluctance to lower tariffs on sensitive agricultural products and its resistance to the import of genetically modified (GM) foods and dairy products.

Despite policy roadblocks and diplomatic hurdles, the numbers clearly indicate that businesses on both sides are finding opportunities and capitalizing on mutual demand.

What’s Driving the Growth?

Several commodities are fueling this uptick in trade:

India’s Top Agri-Exports to the U.S.:

  • Seafood (especially shrimp) remains the top export item. The U.S. appetite for Indian seafood continues to grow.
  • Basmati rice, known for its aroma and quality, consistently performs well in U.S. markets.
  • Spices and essential oils, such as turmeric, cumin, and menthol, cater to both the South Asian diaspora and the wellness market in the U.S.
  • Processed foods and bakery products are becoming increasingly popular due to rising demand for ethnic and specialty foods.

India’s Major Agri-Imports from the U.S.:

  • Tree nuts, particularly almonds and pistachios, constitute a large portion of imports. These products are widely used in Indian sweets, snacks, and health food markets.
  • Ethanol imports have jumped, primarily for industrial and blending purposes.
  • Soybean oil and cotton also rank high, with industrial and textile sectors driving demand.

Trade in these categories has not only remained stable but also grown, defying diplomatic deadlocks and tariff hikes.

Why Talks Keep Failing

While the numbers are encouraging, the politics of agriculture tell a different story.

India has consistently resisted U.S. demands to open up its agriculture and dairy sectors. There are deep-rooted fears that cheap subsidized imports from the U.S. could destabilize domestic markets, affecting millions of Indian farmers and dairy producers.

The key issues in contention include:

  • High Indian tariffs on essential agri imports, some of the highest in the world.
  • Restrictions on genetically modified (GM) crops, which India has not approved for consumption or cultivation.
  • Non-tariff barriers such as sanitary and phytosanitary regulations (SPS) that the U.S. claims unfairly restrict its exports.
  • Farmer opposition: Several farmers’ unions in India have publicly opposed any deal that allows foreign agricultural products to flood domestic markets.

India sees agriculture as not just an economic sector, but a matter of food security and rural livelihoods. As a result, any trade agreement that includes major concessions in this sector is politically sensitive.

Missed Opportunities and Economic Risks

Trade experts argue that both countries are missing out on potential benefits due to the deadlock. The U.S. wants greater access to India’s vast market for items like dairy, poultry, and GM crops, while India seeks reduced tariffs on its exports like steel, textiles, and pharmaceuticals.

There are also broader economic consequences. Analysts at S&P Global recently warned that prolonged trade friction with the U.S., including steep tariffs and agriculture-related stalemates, could pull India’s GDP growth below 6.2% in FY26. The economic cost of an unresolved trade deal could outweigh the political gains.

The Paradox: Trade Grows Despite Politics

The paradox is striking. While policymakers argue over tariffs and regulations, the private sector continues to drive trade forward. Exporters and importers on both sides are adapting to policy uncertainties and making the most of what’s available under current rules.

This is partly due to strong demand in both countries:

  • American consumers want more Indian food products, driven by changing food preferences and increasing interest in global cuisines.
  • Indian industries are seeking high-quality U.S. agri inputs like cotton, ethanol, and almonds to fuel manufacturing and processing.

In short, the India-U.S. agri trade story in 2025 is a case of “business finding a way” even when politics can’t.

The Road Ahead

With U.S. elections around the corner and India closely guarding its domestic agri policies, a breakthrough trade agreement appears unlikely in the immediate future. However, both countries continue to engage in lower-level talks to resolve smaller disputes and find middle ground on less sensitive issues.

Some possibilities include:

  • Tariff reductions on select commodities like bourbon, lentils, or walnuts.
  • Easier customs clearance processes and digital trade cooperation.
  • Enhanced private sector collaboration in food processing and technology sharing.

Conclusion

Agriculture may continue to be the Achilles’ heel of India–U.S. trade negotiations, but the rising trade volumes suggest a robust underlying demand and resilience in economic ties. Businesses are clearly not waiting for diplomats to strike a grand bargain.

Instead, they are capitalizing on what’s already on the table—and pushing forward. While a comprehensive trade deal remains elusive, the thriving trade in agriculture shows that commerce often flows faster than diplomacy.