Trump’s ‘Great Deal’ could be India’s great fall

When US President Donald Trump declared yet again that he wants a “great deal” with India, it was more than diplomatic posturing. It was a reaffirmation of a deeply transactional worldview, where trade is not about mutual benefit but about strategic gain—one nation winning more, and the other conceding more. As India and the US advance towards a Free Trade Agreement (FTA), it’s time to pause, reflect and ask: at what cost?

Trade deals are not inherently bad. When negotiated with national interests in mind, they can open markets, reduce costs and promote growth. But trade deals must be symmetrical. They must protect the weak, not empower the dominant. When it comes to US–India agricultural trade, the imbalance is glaring. The US operates one of the most heavily subsidised farm economies in the world. India, by contrast, is a patchwork of vulnerable smallholder farmers, eking out a living without price support, infrastructure or safety nets.

Consider the dairy sector — employing over 75 million rural Indians. American dairy giants benefit from $12 billion annually in federal subsidies. This allows them to dump surplus products like whey powder and cheddar cheese into global markets at prices Indian farmers can’t match. American cheddar sells at ₹300 per kilo. Indian producers, working without subsidies, need at least ₹475 to break even. Lowering dairy tariffs as part of the FTA would cause a collapse in Indian milk prices, force millions to abandon livestock, and erode the very foundation of rural livelihoods.

There is also a moral and cultural dimension. American dairy products are often made using rennet, an enzyme extracted from the stomachs of slaughtered calves. Cattle feed in the US often contains animal byproducts. These practices clash with Indian vegetarian and religious norms. Flooding Indian markets with such products under an FTA would trigger not just economic dislocation, but ethical resistance, too.

MORE | Will India get a full reciprocal tariff exemption from US? Interim trade deal negotiations in final stages

Soybean oil is another example. Thanks to the US–China trade war, soybean stocks in America surged to over 46 million tonnes. The US needs alternate markets, and India—if it slashes import duties—would become a convenient dumping ground. That would devastate domestic oilseed producers. Why should Indian farmers growing mustard, groundnut, or sesame compete with a crop subsidised and stockpiled abroad?

Wheat tells a similar story. In 2016, when India temporarily dropped wheat duties to zero, imports surged to nearly 6 million tonnes and domestic prices crashed. If India agrees to wheat tariff reductions again, we can expect American wheat—sold at artificially low prices—to pour into Indian markets, undermining the minimum support price system and the procurement that underpins India’s food security.

Corn, or maize, once a symbol of India’s self-sufficiency, is under threat too. The US is the world’s largest corn exporter, and its surpluses seek entry points across the globe. India’s poultry, starch and ethanol industries use corn extensively. Replacing domestic maize with cheap American imports would strike at the heart of India’s corn belt—Bihar, Karnataka Madhya Pradesh—and destabilise not only agriculture but local economies, too.

Then there is poultry. American companies export chicken legs and other “low-value” cuts—rejected by domestic consumers but sold abroad at throwaway prices. Since 2018, when India lost a WTO case and began allowing US poultry imports, the trickle has begun. Under a full FTA, the floodgates would open. Indian poultry farms—already strained by feed costs—would find it impossible to compete. And since Indian poultry feed is mostly maize and soybean, the damage would boomerang back to crop farmers too.

Peanuts and lentils are no exception. After India reduced import duties in late 2023, pulse imports nearly doubled in one year—from 2.45 million tonnes to 4.5 million tonnes. That single policy shift shook India’s hard-won journey to pulse self-sufficiency. It took decades to encourage farmers to grow tur, urad and moong.

Another tariff reduction under the FTA would reverse this progress in months.

Horticulture is already hurting. After India cut tariffs on US apples by 50 per cent, imports soared 16-fold in just one year, devastating growers in Himachal Pradesh and Kashmir. These apples, stored for months in advanced cold chains and shipped across oceans, now outsell fresh, seasonal Indian varieties in metros. How does a farmer in Kullu or Shopian compete with corporate-backed, government-subsidised agribusiness?

Cotton presents an even more ironic tragedy. India is the world’s largest cotton producer. Yet, cheap US cotton is seeping into Indian mills. Why? Because American cotton is backed by strong price support systems, insurance subsidies and logistics subsidies — none of which Indian farmers enjoy. A deal that facilitates more US cotton will erode not just India’s markets but also its cotton seed sovereignty.

But the real long-term threat lies not just in goods but in clauses. US trade agreements often include stringent intellectual property rights provisions. These cover seed patents, biotech crops and proprietary pesticides. If India agrees to such terms, it could surrender the right of its farmers to save and reuse seeds — a centuries-old practice that underpins biodiversity and resilience.

President Trump’s latest statement—calling for a strong and fair deal with India—must be decoded for what it is: a demand for a tilted table, where America plays with loaded dice. “Fairness” in this context is a euphemism for “access to your market on our terms.” Trump’s America First approach leaves little room for the developmental concerns of a partner nation like India.

India has already signed 17 FTAs. Some have worked, others haven’t. But none of them has posed such comprehensive risks to such a vast swathe of our rural economy. This time, we are dealing with a country that treats trade as an extension of statecraft, and surplus disposal as strategy. A nation that subsidises its farmers so deeply that even their waste becomes a competitive export.

India cannot walk blindly into this deal. Negotiators must carve out sensitive sectors, insert quantitative restrictions, reject IP enforcement that threatens food security, and, above all, refuse to equate American overproduction with Indian needs. Agriculture is not just an economic sector here—it’s a way of life, a cultural core and the largest source of employment.

If there is anything the government should learn from this process, it is this: we don’t need a “great deal” if it comes at the expense of farmers. A deal that hollows out domestic production, increases import dependence and deepens rural distress is not a trade agreement—it is economic surrender.

President Trump may want a legacy-defining agreement. But, for India, this must not be about appeasing a superpower’s ego. It must be about protecting livelihoods, preserving self-reliance and promoting fair—not free—trade.

No deal is always better than a bad deal. And the Indo–US FTA, in its current trajectory, is shaping up to be a very bad deal. Let us not mistake ambition for wisdom.

 

 

The writer is professor, Centre for South Asian Studies, School of International Studies & Social Sciences, Pondicherry Central University.

Business