India’s trade relationship with the United States has once again become the centre of political and economic discussion after the Commerce Secretary Rajesh Agrawal clarified that all key sensitive sectors have been protected under the proposed India-U.S. Interim Trade Pact. His statement comes at a time when Opposition parties have raised concerns about the impact of the trade agreement on farmers, MSMEs, domestic manufacturing, and the Make in India initiative.

The Commerce Secretary said that the interim arrangement is part of a broader effort to strengthen bilateral trade relations, while ensuring that India’s core economic interests are not compromised. According to him, both sides are currently working to convert the joint understanding into a formal legal agreement, which is expected to be finalised and signed before the end of March.

This development is significant because the United States remains one of India’s largest trading partners. Any agreement between the two nations directly impacts exports, imports, tariffs, market access, and domestic industry competitiveness.

Background of the India-U.S. Trade Talks

India and the United States have been negotiating trade issues for several years. While trade between the two countries has grown steadily, certain disputes regarding tariffs, market access, intellectual property rights, digital trade, and agricultural products have continued to create friction.

In recent months, discussions intensified with both governments expressing their intention to move towards a more structured trade framework. The current interim trade pact is seen as a stepping stone towards a comprehensive trade agreement in the future.

The interim pact is not a full free trade agreement. Instead, it is designed to resolve immediate trade irritants, improve market access in selected sectors, and create a positive environment for long-term cooperation.

According to the Commerce Secretary, the focus has been on achieving balanced outcomes, rather than giving unilateral concessions.

What Are ‘Sensitive Sectors’?

One of the major concerns raised by lawmakers and industry bodies was whether the agreement would expose India’s vulnerable sectors to heavy competition from U.S. companies.

The Commerce Secretary clarified that the government has clearly identified certain sectors as “sensitive” and ensured that these remain protected.

These include:

• Agriculture and dairy

• MSMEs (Micro, Small and Medium Enterprises)

• Defence and strategic industries

• Pharmaceuticals

• Digital data and e-commerce regulation

• Automobile manufacturing

• Public procurement policies

He emphasised that no commitments have been made that would harm Indian farmers or small industries.

This assurance is crucial because agriculture employs a large section of India’s population. Any reduction in tariff protection could lead to increased imports of U.S. agricultural products, potentially affecting domestic farmers.

Similarly, MSMEs form the backbone of India’s manufacturing sector. Opening markets without safeguards could impact employment and local production.

Protection of Agriculture and Farmers

One of the biggest political concerns revolves around agricultural imports, especially dairy and food products from the United States.

The Commerce Secretary clearly stated that India has not compromised on agricultural safeguards. He explained that tariff structures in sensitive farm products remain intact and no large-scale market access has been granted that would hurt Indian farmers.

India has always maintained strict standards in dairy imports, particularly regarding animal feed practices in exporting countries. The government has indicated that these standards will continue.

This means that domestic dairy cooperatives and farmers will not face sudden competition from heavily subsidised foreign products.

By maintaining these protections, the government aims to ensure that the interim pact does not disturb rural income stability.

Impact on MSMEs and Make in India

Another important concern is the effect on the Make in India initiative.

Opposition leaders have argued that trade deals could lead to flooding of Indian markets with U.S. goods, thereby affecting local manufacturing.

However, the Commerce Secretary rejected these claims. He said that tariff rationalisation, where discussed, has been selective and carefully calibrated.

The interim agreement, according to him, seeks to expand opportunities for Indian exporters in the U.S. market rather than weaken domestic production.

He highlighted that sectors such as:

• Textiles

• Engineering goods

• Pharmaceutical exports

• IT services

• Gems and jewellery

are expected to benefit from improved access to the American market.

The government’s position is that increased exports will strengthen domestic production and generate employment.

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