New Delhi, April 10 – India must reconsider its approach towards negotiating a comprehensive Free Trade Agreement (FTA) with the United States due to potential risks to key domestic sectors such as agriculture, automobiles, and pharmaceuticals, according to the Global Trade Research Initiative (GTRI). As per agency report, the economic think tank issued a cautionary note on Thursday highlighting that several U.S. demands in such a trade deal could pose significant threats to India’s internal policy space and economic stability.
GTRI pointed out that these demands may include reducing the minimum support price subsidies provided to farmers, permitting the import of genetically modified food, lowering tariffs on agricultural products, amending patent laws to extend pharmaceutical monopolies, and allowing American e-commerce giants to sell directly to Indian consumers. The research group warned that such concessions could adversely affect farmers’ incomes, food security, biodiversity, public health, and the survival of small retailers.
The institute emphasized that tariff reductions on agricultural products could jeopardize the livelihoods of millions of Indians, while slashing car import duties might undermine a sector that represents nearly one-third of India’s manufacturing output. It cited the collapse of Australia’s car industry following steep tariff cuts in the 1990s as a cautionary tale.
These remarks come in the context of the U.S. recently imposing an additional 26 percent import duty on Indian goods, although the enforcement has been deferred by 90 days. However, Indian exports to the U.S. are still subject to a 10 percent base tariff as of April 5.
Ajay Srivastava, founder of GTRI, recommended avoiding a full-scale FTA with the U.S., arguing that it could pressure India into conceding harmful trade advantages. He suggested that India instead propose a limited 'zero-to-zero' tariff deal covering up to 90 percent of industrial products, excluding sensitive items like automobiles. The European Union has reportedly made a similar proposal to the U.S.
The 'zero-to-zero' concept refers to eliminating tariffs on specific categories of goods traded between countries. Srivastava recommended exploring deeper product value chain collaborations with countries like China, particularly in sectors such as chemicals, machinery, and electronics.
He also advised the Indian government to prioritize free trade talks with the European Union, the United Kingdom, and Canada, while considering strategic partnerships with countries like China and Russia. In addition to foreign trade strategies, GTRI called for urgent domestic reforms, including simplification of customs duties, smoother enforcement of quality control regulations, improvements in the Goods and Services Tax (GST) framework, and overall streamlining of trade procedures.
According to the think tank, these steps are essential if India intends to leverage global economic shifts effectively, even if the pace of progress remains gradual.
