When the US push comes to shove, India must resist

India is trying to negotiate a bilateral trade agreement (BTA) with the United States even as President Donald Trump’s unpredictable behaviour and continuous shifting of goalposts blur even the basic contours of an agreement. These are understandably difficult negotiations, and a lot is at stake given that the US is one of India’s most significant trade partners, as the numbers reveal.

In 2024, India’s bilateral trade with the US reached $123.8 billion, with a trade surplus of $37.7 billion for India. The US also remains India’s largest export market, accounting for 18.3 per cent of the total. India’s exports to the US nearly doubled from $42.7 billion in 2014 to $80.8 billion in 2024.

The US has extended the deadline for a trade deal from 9 July to 1 August under the threat of punitive tariffs of 26 per cent if an agreement is not reached by then.

The extension signals hope and optimism that a deal is possible and workable, but it equally signals that the US side is pushing hard to see if India will bend under pressure. Another explanation is that the extension in itself is a case of ‘TACO’ — ‘Trump Always Chickens Out’ — given that blanket tariffs on the rest of the world as envisaged by the US are simply not sustainable.

But this is less likely — with the dominant mood in Washington being to push hard, unmindful of the consequences, and India not being in the strongest position to dictate terms. Further, the US has extracted significant concessions from others, including the UK, and would demand that India, too, fall in line.

Of course, the people of India would expect the country not to bend to anything unreasonable, even though such demands have become the currency of the US. This government should ignore image management within the nation vis-á-vis the trade deal and take tough calls that protect Indian interests even if this runs the risk of not having a trade deal.

Trade policy on a wing and a prayer

There are two scenarios: one where we have a deal and are worse off by allowing concessions and giving in where we should not; the other where we don’t have a deal and are still worse off since tariffs will impact trade and hurt India and its exports.

Not striking a deal on America’s terms will attract punitive tariffs and create disruption in the short term. However, there are a chances of mitigation as the US economy will not be able to sustain a trade war with the whole world for a long time; eventually the US will have to make some reversals and concessions.

Having a trade deal by granting undue concessions to the US can be far worse since it will open Indian markets to products and services that will, in the long run, affect local producers adversely, even disastrously.

In this context, two hot-button items are the US push for exports of genetically modified (GM) crops and cow milk to India. While these are not new demands, they are red lines for India. India must make it clear that these are non-negotiable.

For example, India requires that edible dairy products be drawn from animals that are not given blood meal or feed containing internal organs or tissues of ruminant or porcine origin. This is a perfectly fair and reasonable requirement — cows and buffaloes used for milk production are herbivores and must not be given any animal products as food.

Further, milk in the Indian context is culturally sensitive given that it is used for religious offerings and to make sweets for auspicious occasions. Yet, the US position as articulated in the US ‘2025 National Trade Estimate Report on Foreign Trade Barriers (FTB)’ is that Indian requirements ‘lack a discernible animal health or human health justification’. Clearly, the US wants to dump excess produce that has been achieved through intensive methods and a growing chemicalisation of the industry. Such a sectoral opening-up will kill the Indian dairy sector.

For Trump, tariffs are like toys— can India really trust him?

A worrying factor is that imported US milk contains a recombinant bovine growth hormone (rBGH), which is approved in the US since 1993 to increase milk production in cows, but is banned in the European Union and Canada. The rBGH increases the production of an insulin-like growth factor-1 (IGF-1) in treated cows, which leads to a higher concentration of IGF-1 in their milk and meat. High levels of IGF-1 have, in turn, been linked to prostrate, breast, colorectal and other cancers, though the linkage is not definitive, according to the American Cancer Society.

As for GM crops, the Alliance for Sustainable and Holistic Agriculture or ASHA-Kisan Swaraj network, which brings together farmers and agriculturists, has written to the government appealing against any concessions to the US: ‘We write to you with grave concern over reports that the government… is under pressure to allow the import of GM crops and US milk and dairy products into India. We strongly urge you to stand firm and unequivocally reject any such move, which would have serious and irreparable implications for India’s agriculture, biosafety, public health, rural livelihoods, and seed and food sovereignty.’

These are real concerns and the government must assure the nation that it will not give in. As it happens, the US wants much more. Take the example of stent prices, which were capped in India when the regulators found that price inflation was as high as 2,000 per cent. While patients suffered, everyone made merry — until the caps came in.

In the 2025 FTB report, the US has argued that ‘price controls (on coronary stents and knee implants) have not been increased in line with inflation and do not differentiate on the basis of the cost of production or technological innovation, which dissuades US companies from serving the market’.

The drift is clear. The US wants to extract if not extort. India must resist.

Jagdish Rattanani is a journalist and faculty member at SPJIMR. More of his writing can be found here

Courtesy: The Billion Press