Why is the India-US trade deal being held up by farm products?
U.S.-India trade negotiators pushed on Wednesday for a finalisation of a tariff reduction deal before President Donald Trump's deadline July 9 but disagreements regarding U.S. agriculture and dairy remained unresolved.
Why are agricultural imports sensitive in India?
Agriculture and related areas only contribute 16% of India's $3.9 trillion GDP, but support nearly half the 1.4 billion people in the country. Farmers remain India's most powerful voting block, and Prime Minister Narendra modi's government had to retreat from controversial farm laws four years ago.
The prospect of cheaper imports coming from the United States could drive local prices down, giving the opposition another opportunity to attack the Government. New Delhi has historically excluded agriculture from Free Trade Agreements. India could be forced to make similar concessions if it grants market access to other trading partners.
How do Indian and US farms compare?
In India, the average farm is only 1.08 hectares compared to 187 in the United States. In India, dairy herds are typically two to three cows per farmer, as opposed to hundreds of animals in the United States.
It is difficult for Indian small farmers to compete against their American counterparts.
India's farming is largely non-mechanized due to the small and fragmented landholdings. Farmers in many areas rely on methods passed down from generation to generation, which is a stark contrast with U.S. farms where AI and cutting-edge technology have increased productivity.
WHAT PRODUCTS DO WE LOBBY FOR? WHY DOES INDIA REFUSE?
The United States wants India to expand its market to include a variety of American products. These include dairy, poultry and poultry products, as well as corn, soybeans rice, wheat, ethanol. Other American goods include canned peaches, almonds pecans apples grapes, frozen French fries, chocolates cookies and pecans. India is open to allowing more access to U.S. apples and dry fruits, but it's not so keen on corn, soybeans or wheat.
India has banned genetically modified food crops in India, but the majority of corn and soybeans produced in the United States are GM.
Dairy is a sensitive topic in India where culture and diet strongly influence the food choices. Indian consumers are concerned about the fact that in the U.S. cattle are fed animal by-products. This practice is contrary to Indian eating habits.
Why does India not allow us to mix ETHANOL with gasoline?
A key aim of India's Ethanol Blended Petrol (EBP) program is to cut dependence on energy imports by blending domestically-produced ethanol with gasoline. India is close to reaching its ambitious goal of blending 20% with ethanol thanks to significant investments made by domestic companies. Importing ethanol could undermine these companies.
EBP helps manage excesses of corn, rice, and sugarcane by diverting the surpluses to ethanol production. Importing U.S.-made ethanol could be a major setback to India's growing distillery industry. (Reporting and editing by PhilippaFletcher; RajendraJadhav)
(source: Reuters)
