India offers US dairy, chicken access in bid for elusive trade deal with Trump

India has traditionally restricted dairy imports to protect the livelihoods of 80 million rural households involved in the industry. PHOTO: ST FILE

NEW DELHI/WASHINGTON (REUTERS) - India has offered to partially open up its poultry and dairy markets in a bid for a limited trade deal during United States President Donald Trump's first official visit to the country this month, people familiar with the protracted talks say.

India, the world's largest milk-producing nation, has traditionally restricted dairy imports to protect the livelihoods of 80 million rural households involved in the industry.

But Prime Minister Narendra Modi is trying to pull all the stops for the US President's Feb 24-25 visit, aimed at rebuilding bonds between the world's largest democracies.

In 2019, Mr Trump suspended India's special trade designation that dated back to 1970s, after Mr Modi put price caps on medical devices, such as cardiac stents and knee implants, and introduced new data localisation requirements and e-commerce restrictions.

Mr Trump's trip to India has raised hopes that he would restore some of the country's US trade preferences, in exchange for tariff reductions and other concessions.

The US is India's second-largest trade partner after China, and bilateral goods and services trade climbed to a record US$142.6 billion (S$198.2 billion) in 2018. The US had a US$23.2 billion goods trade deficit in 2019 with India, its ninth-largest trading partner in goods.

India has offered to allow imports of US chicken legs, turkey and produce such as blueberries and cherries, Indian government sources said, and has offered to cut tariffs on chicken legs from 100 per cent to 25 per cent. US negotiators want that tariff cut to 10 per cent.

The Modi government is also offering to allow some access to India's dairy market, but with a 5 per cent tariff and quotas, the sources said. But dairy imports would need a certificate that they are not derived from animals that have consumed feeds that include internal organs, blood meal or tissues of ruminants.

New Delhi has also offered to lower its 50 per cent tariffs on very large motorcycles made by Harley-Davidson, a tax that was a particular irritant for Mr Trump, who has labelled India the "tariff king". The change would be largely symbolic because few such motorcycles are sold in India.

Mr Trump will be feted in Mr Modi's home state of Gujarat, then hold talks in New Delhi and attend a reception that the hosts have promised will be bigger than the one organised for former president Barack Obama in 2015.


But it is far from clear whether India's offers will be enough to satisfy US Trade Representative Robert Lighthizer, who cancelled plans for a trip to India this week. Instead, he has held telephone talks with Indian Commerce Minister Piyush Goyal.

The US dairy industry remained sceptical on Thursday (Feb 13) that a viable deal is at hand.

"We're always looking for market access, but in terms of India, as of today I'm not aware of any real progress going on," said Mr Michael Dykes, president of the International Dairy Foods Association and a member of USTR's agricultural trade policy advisory committee.

Mr Dykes said the US dairy industry was looking for access in viable commercial quantities.

A USTR spokesman and India's trade ministry did not respond to requests for comment.


An Indian Parliament panel is reviewing a draft data privacy law that imposes stringent controls over cross-border data flows and gives the government powers to seek user data from companies.

It is not clear whether it will be passed, or in what form, but the possibilities have unnerved US companies and could raise compliance requirements for Google, Inc, and Facebook.

The draft law is not part of the trade discussions, Indian officials say, because the issue is too difficult to resolve at the same time.

"The privacy and localization piece will be raised independently and in concert with the trade discussions," said a Washington-based source with knowledge of the US administration's thinking.

Mr Trump on Tuesday was non-committal about sealing a trade deal before his visit. "If we can make the right deal, we'll do it," he told reporters.

Two US sources said progress had been made on proposed alterations to the medical device price caps. India's new import tariffs on medical devices, walnuts, toys, electronics and other products on Feb 1 surprised US negotiators, however.

The new tariffs were aimed at China, which also makes medical devices, according to an Indian government source. "We have to protect our market and our companies," the source said.

Join ST's Telegram channel and get the latest breaking news delivered to you.