India should tread fastidiously in commerce talks with the US, particularly on agriculture, the place international subsidies may hurt small Indian producers, former RBI Governor Raghuram Rajan warned on Friday.
In an interview with PTI Movies, Rajan urged “very cautious and intelligent” negotiation, because the nation finalizes phrases of a proposed Bilateral Commerce Settlement (BTA) with the US. “Unconstrained stream of agricultural merchandise into the nation could create issues,” he mentioned, noting India’s producers obtain far much less state assist in comparison with their developed-country counterparts.
Agriculture and dairy stay politically delicate in New Delhi. India has but to concede obligation cuts in these sectors underneath any commerce deal—one thing the US is reportedly pushing laborious in present talks. President Donald Trump has indicated the India deal could mirror America’s settlement with Indonesia, elevating considerations amongst Indian negotiators.
“Slightly than welcoming extra milk imports, we should always deal with encouraging international direct funding to spice up value-added dairy manufacturing right here,” Rajan mentioned. Merchandise like milk powder and cheese may benefit Indian producers extra by way of home upgrades than import competitors.
Rajan additionally acknowledged that world commerce turbulence—pushed by Trump’s escalating tariffs—may trim India’s GDP progress barely from its present 6-7% vary. Nonetheless, he sees long-term alternative if India positions itself instead manufacturing base. “If US tariffs on China and others are steeper than on India, we may even see manufacturing stream right here,” he added.
The Indian authorities is looking for the elimination of a 26% extra US tariff, together with reductions in duties on metal (50%) and autos (25%). India’s group, led by prime commerce officers, concluded a fifth spherical of negotiations in Washington this week.
Whereas cautioning towards protectionism, Rajan mentioned focused tariff reductions may improve competitiveness in sectors like auto manufacturing. “We produce sure sorts of automobiles very effectively,” he mentioned, suggesting decrease import obstacles would possibly even sharpen home efficiency.
