India-US Trade Deal: MIPs to Negate Impact of Duty Cuts on Sensitive Agri Goods

New Delhi is likely to continue relying on minimum import prices (MIPs) rather than headline customs duty reductions under the proposed India–US trade deal, a move aimed at protecting India’s sensitive agricultural sector, Moneycontrol reported citing government sources.

Officials said the use of MIPs would ensure that duty cuts do not materially alter market outcomes for sensitive farm products, even as limited market access is explored for select agricultural items.

“Where a minimum import price applies, reducing the duty does not necessarily make imports cheaper, as assessments are done on the floor price,” Moneycontrol quoted a source as saying. “Duty cuts have limited impact on sensitive farm products if MIPs continue.”

Speaking at a conference earlier this week, shortly after the India–US trade deal announcement, Union Minister of Commerce and Industry Piyush Goyal reiterated that the government would continue to safeguard farmers’ interests.

According to the report, even when import duties are lowered, consignments priced below the notified minimum import price are still assessed at the floor price, preventing subsidised agricultural products from undercutting domestic prices. A minimum import price is a government-prescribed floor value below which imports of specific products cannot be assessed by customs.

Maize, fruits, and dry fruits remain among the most sensitive items in trade negotiations. “These are sectors where sudden exposure to cheaper imports can quickly depress domestic prices,” the report quoted a government official as saying. “That sensitivity has not changed, irrespective of the trade talks.”

The official added that unless the floor price itself is revised, the effective protection for these sectors remains intact.

India–US Deal to Mirror India–EU FTA Approach

Government officials indicated that the India–US trade deal could follow the framework used in the India–EU free trade agreement, where New Delhi partially opened its agriculture sector while retaining high minimum import prices and tightly controlled quotas.

Under the India–EU FTA, preferential market access was granted to select agricultural products such as tea, coffee, spices, grapes, gherkins and cucumbers, dried onions, fresh fruits and vegetables, and certain processed food items. However, sensitive segments including dry fruits, dairy, poultry, and cereals continue to remain protected.

Officials have consistently maintained that India will not open its agricultural and dairy sectors under trade agreements, except for allowing limited access to select products.

A joint statement from New Delhi and Washington are expected in the coming days, with the formalisation of the India-US deal anticipated by mid-March this year.