As India and the United States deepen their strategic and economic partnership, a Bilateral Trade Agreement (BTA) holds significant promise for transforming agri-food trade between the two nations—if crafted strategically. The Centre for Advanced Trade Research (CATR), the research division of the Trade Promotion Council of India (TPCI), explores this potential in its latest report, “India–US BTA: Prospects for Agriculture & Allied Sectors.
Despite the US being the world’s largest food and beverage importer, India remains a relatively minor player, ranking 8th and primarily exporting raw commodities. The report identifies key challenges—high tariffs, differing sanitary and phytosanitary (SPS) norms, and complex compliance procedures—that limit India’s competitiveness. Drawing lessons from US trade agreements with countries like Australia and South Korea, the study emphasizes that tariff reduction alone is not enough. Regulatory alignment, science-based SPS cooperation, and simplified processes—especially for MSMEs—are critical to unlocking new export opportunities and building a more resilient, balanced agri-trade relationship.
As India and the United States continue to deepen their strategic and economic engagement, the prospect of a Bilateral Trade Agreement (BTA) between the two nations has gained renewed momentum. Both countries are increasingly focused on strengthening supply chains, diversifying trade partnerships, and unlocking new growth opportunities, objectives that a well-negotiated BTA could significantly advance. Among the many sectors that would benefit, agriculture and allied industries stand out as particularly critical, given their complexity, sensitivity, and untapped potential.
India’s agri-food sector is a cornerstone of its export economy, offering a wide spectrum of products ranging from raw agricultural commodities to high-value processed foods. At the same time, the US is the world’s largest importer of food and beverages, with imports reaching US$ 222.6 billion in 2024. However, despite this enormous market size, India ranks only 8th among F&B exporters to the US, with exports valued at US$ 5.9 billion, of which 75% are raw and 25% processed. This modest share reflects the challenges posed by high tariffs, regulatory divergences, and non-tariff barriers, particularly in the form of sanitary and phytosanitary (SPS) standards.
Recognising the need to bridge this gap and advance mutually beneficial outcomes, the Trade Promotion Council of India (TPCI) has prepared the report, India–US BTA: Prospects for Agriculture & Allied Sectors. This study aims to provide a data-driven, sector-specific perspective on how a well-structured BTA could enhance India’s agri-export competitiveness, facilitate regulatory convergence, and unlock new opportunities in underleveraged product categories like millets, sugar confectionery, and value-added fruits and vegetables. It also underscores how India’s traditional strengths in areas like spices, basmati rice, and shrimp can be amplified with targeted trade facilitation and policy support.
Given the structural complementarity between India’s agro-diversity and the US’s technology-driven agri-ecosystem, this report is both timely and strategic which aiming to aid policymakers and industry stakeholders as they navigate the contours of a potential agreement that can catalyse long-term agricultural cooperation and market access gains.
Table 1: Top F&B exporting nations to the US (2024)
Source: ITC Trade Map
India’s current food export basket to the US consists of three-fourths raw products and one-fourth processed goods. The top five food and beverage products exported from India to the US make up 70% of the total export value. Fish and crustaceans, molluscs, and other aquatic invertebrates lead with a 35.6% share. Preparations of meat, fish, crustaceans, molluscs, or other aquatic invertebrates follow at 10.9%. Coffee, tea, maté, and spices hold 8%, while lac, gums, resins, and other vegetable saps and extracts account for 7.6%. Cereals contribute 7% to total exports.
Table 2: India’s Top 5 F&B exports to the US
For further expansion into the US market, the TPCI report identifies several products with significant export potential for India in the US market across cereals, sugar and confectionery, processed foods, vegetables, and spices. In cereals for instance, semi- or wholly milled rice (HS 100630) is a flagship product, with India supplying nearly 25% of US imports. But it faces a high MFN tariff of 11.2%, limiting competitiveness. Millets (HS 100829), a traditional Indian grain is now gaining appeal for the health-conscious, and already accounts for nearly 60% of US imports. Expanding into quinoa (HS 100850) and fonio (HS 100840), where Indian presence is currently negligible, offers further diversification opportunities despite high tariffs.
The sugar and confectionery segment (HS 17) presents substantial scope for growth. Products such as sugar confectionery (HS 170490), glucose syrups, invert sugar, and chemically pure sugars face compound US tariffs up to 35.74¢/kg, which restricts India’s participation despite its global production capabilities. Raw cane sugar (HS 170114) is particularly constrained by stringent tariff-rate quotas that limit access to the US$ 1.7 billion market. A bilateral trade agreement (BTA) enabling quota expansion or duty-free entry would significantly enhance India’s export prospects.
In processed foods, India holds strong positions in key categories like shrimp and prawns (HS 160521), capturing nearly 28% of the US import market, and preserved gherkins (HS 200110), where India dominates with a 60% share. Cocoa butter (HS 180400) also shows potential with a 6.7% share. Other growing processed categories include bread, pastries, biscuits (HS 190590), and miscellaneous edible preparations (HS 210690), which stand to benefit from regulatory harmonization and improved labelling compliance under a BTA.
Significant untapped potential exists in vegetables and fresh produce. Dried vegetables and powders (HS 071290) and frozen mixed vegetables (HS 071090) face MFN tariffs up to 30% and 14%, respectively, limiting Indian exports despite proven capabilities. Similarly, mushrooms, asparagus, lettuce, and tomatoes—important US import categories—see minimal Indian participation largely due to tariff and sanitary and phytosanitary (SPS) barriers. Addressing these through trade facilitation and regulatory alignment offers clear avenues for export diversification.
In spices, India is a reliable supplier of crushed dried chillies (HS 090422) and whole capsicum (HS 090421), yet residual duties and non-tariff barriers such as labelling issues continue to hinder deeper market integration. Segments like green tea, ginger, and spice blends, which are growing due to increasing health awareness and ethnic cuisine popularity, also offer expansion potential.
Overall, these products reflect the strong complementarity between India’s agro-diversity and the US’s consumer-driven food ecosystem. Reducing tariff asymmetries and non-tariff barriers through a forward-looking BTA would enable India not only to consolidate its current export strengths but also to penetrate emerging, high-growth segments in processed, health-oriented, and value-added food categories.
Non-tariff barriers significantly hinder India’s access to the US agricultural and processed food market, despite its competitive strengths. Indian exporters face complex regulatory hurdles, including divergent sanitary and phytosanitary (SPS) standards, high compliance costs, and procedural unpredictability.
A key challenge is the mismatch in Maximum Residue Limits (MRLs) for pesticides, which has led to incidents like the 2013 rejection of Indian rice due to tricyclazole residue. Similarly, grape consignments have been denied entry despite meeting requirements, pointing to inconsistent implementation. Product-specific issues also create friction—mangoes exported to the US must undergo gamma irradiation, unlike the hot water treatment accepted by the EU, increasing operational burdens for exporters.
The lack of mutual recognition of certifications and prolonged approval timelines further limits India’s market access. These NTBs are particularly burdensome for small and medium-sized exporters who struggle with the financial and logistical demands of compliance. Addressing these issues through regulatory harmonisation, science-based SPS cooperation, and simplified procedures under a future India–US BTA will be essential to ensure stable, equitable, and expanded trade in agriculture and allied products.
The US currently maintains 14 Free Trade Agreements (FTAs) with 20 countries, encompassing both regional and bilateral arrangements. Notable agreements include the US-Mexico-Canada Agreement (USMCA), the US-Korea FTA (KORUS), and pacts with Australia, Singapore, Chile, and Israel. These agreements primarily focus on eliminating tariffs, addressing non-tariff barriers, enhancing intellectual property protections, and promoting investment flows. The USMCA, a modernised successor to NAFTA, further incorporates labour standards, environmental protections, and digital trade provisions, reflecting a more comprehensive and values-driven trade framework.
Table 3: Snapshot of US FTAs
Source: Compilation from USTR
Beginning in the 1980s with the US-Israel FTA—the first of its kind—the US has systematically expanded its trade network to include 20 partner countries. Although these partners represent only about 6% of the global population outside the US, they account for nearly half of American exports, with citizens of FTA countries purchasing American goods and services at 14 times the rate of non-FTA countries on a per capita basis. Agricultural exports have been a major success, with FTA partners accounting for 43% of US agricultural exports in recent years, up from 29% in 1990. Small and medium-sized enterprises, representing more than 98% of US exporters, have particularly benefited, especially in key markets like Canada and Mexico.
A closer look at three FTAs—Australia (AUSFTA), Singapore (USSFTA), and South Korea (KORUS)—was undertaken primarily due to their geographic distance from the United States, which is comparable to that of India. This similarity introduces comparable logistical and trade dynamics challenges, such as shipping costs, supply chain complexities, and market access constraints.
As such, these FTAs offer instructive parallels for assessing potential trade outcomes between the US and India. Moreover, they provide sector-specific insights, particularly within the food and beverage sector, an area highly sensitive to tariffs, regulatory standards, and consumer preferences.
Overall, these case studies highlight that while US FTAs have effectively reduced tariffs and bolstered economic ties, their impact on F&B trade has been mixed. Persistent trade imbalances and variable export growth rates underscore the complexity of liberalising sectors sensitive to regulatory and market conditions. These findings suggest the importance of adopting nuanced strategies in future trade negotiations, particularly in agriculture and food trade sectors, to maximise mutual benefits.
A well-negotiated Bilateral Trade Agreement (BTA) between India and the United States presents a transformative opportunity for agricultural trade and allied sectors. The following strategic avenues can be unlocked through such a partnership:
Tariff cuts and enhanced market access: Targeted tariff reductions, especially on high-demand Indian agri-products like basmati rice, shrimp, millets, gherkins, and processed fruits, can significantly improve India’s competitiveness in the US market. This would help Indian exporters overcome the current disadvantage posed by Most Favoured Nation (MFN) tariffs, which FTA partners like Australia and Singapore do not face.
Regulatory harmonisation to reduce trade friction: Aligning sanitary and phytosanitary (SPS) standards and ensuring mutual recognition of certifications will be critical to easing non-tariff barriers. Transparent, science-based regulatory cooperation can address issues such as maximum residue limits (MRLs), irradiation treatments, and traceability protocols, which currently inhibit trade flow.
Support for value-added products and MSMEs: The BTA can facilitate the entry of Indian small and medium enterprises (SMEs) into the US market by simplifying compliance procedures and reducing costs. Encouraging exports of processed and niche products such as superfoods, organic ingredients, and specialty items like spice blends can further promote value addition and product diversification.
Strengthening long-term economic and strategic partnership: Beyond immediate trade benefits, the BTA would bolster bilateral trust, improve supply chain integration, and position India as a reliable partner in global agri-value chains. It would also complement broader strategic convergence in areas such as technology, investment, and food security, reinforcing the foundation of a resilient India–US economic alliance.
The trade analysis in TPCI’s report India–US BTA: Prospects for Agriculture & Allied Sectors reveals considerable untapped potential in India–US agricultural and processed food exports, especially in categories such as seafood, spices, cereals, and sugar-based products. However, this potential remains constrained by tariff barriers and significant non-tariff obstacles, particularly in the form of SPS standards, residue limits, and inconsistent import procedures.
Case studies of previous US Free Trade Agreements—such as those with Australia, Singapore, and South Korea—show that agricultural trade has not always experienced substantial gains, despite overall liberalisation. This underlines a critical lesson: tariff cuts alone are insufficient unless accompanied by meaningful regulatory alignment and market access facilitation.
Given that the US is the world’s largest agricultural exporter and India has strong capabilities in high-demand categories, the proposed India–US BTA must place special emphasis on agriculture. Targeted tariff relief, science-based SPS cooperation, and streamlined certification processes must be central pillars of the agreement.
By addressing both tariff and non-tariff barriers with precision, the BTA can serve as a powerful catalyst for unlocking high-value agricultural exports from India, fostering resilient supply chains, and establishing a more equitable and mutually beneficial agri-trade relationship.
For a complimentary copy of the TPCI report titled India-US BTA – Prospects for agri sector, click https://shorturl.at/gzmFE.
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