Why Modi will not compromise on trade deal with Trump. These sectors are crucial for Indian economy (and politics)

India has stood firm in its trade negotiations with the US, prioritising its national interests and protecting domestic industries. This is probably what's frustrating President Donald Trump, who announced 25 per cent tariffs and additional penalties on India, citing trade gap, high tariffs as well as non-tariff barriers, and trade in arms and energy with Russia. An Indian team has been negotiating with the US counterparts for a trade deal - reportedy to be worth nearly $118 billion - to avert the tariffs, but the Trump deadline of August 1 is unlikely to be met. There are some crucial sectors of Indian economy on which Prime Minister Narendra Modi's government will not compromise. This is both to protect domestic industries, and to prevent political fallout and possible criticism of selling out to the US.

India won't rush into a trade deal with US

Addressing parliament on Thursday (July 31), Trade Minister Piyush Goyal said the government "will protect the interests of our farmers, small industries and entrepreneurs."

He said India will not rush into an agreement just to meet Trump's deadlines and will only accept a deal that aligns with its national interests.

Protecting the Indian farmer: Agricultural sector safeguards are important for both Indian economy and politics

India is keen to safeguard its farming sector, where the US has been seeking greater market access for products like maize, soybean and corn. Another issue of contention is genetically modified (GM) crops, which India has been resisting. More about it later. Allowing such imports in large amounts will hit domestic farmers as well as food security. In trade deals with other countries also, India has consistently avoided tariff concessions on major agricultural products. The thrust has always been on protecting millions of Indian small farmers in order to ensure food security.

India has a red line on dairy sector

Diary products are another 'non-negotiable red line' for India. India has refused to allow imports of US dairy products, including so-called 'non-vegetarian milk' (possibly from animals fed with certain kinds of feeds or hormones). India wants to protect its dairy farmers and make the domestic market stable. Not just the US, but India has not given duty concessions for dairy products in any of its free trade agreements.

Genetically Modified (GM) Crops: A controversial territory

GM crops have been a controversial topic in India for decades. India has explicitly rejected American demands to allow imports of GM crops, such as soybean and corn. It could hit Indian agriculture, and affect people's health.

Non-Tariff Barriers and quality control orders

Quality Control Orders are part of the ‘self-reliant India’ initiative, aimed at curbing low-quality imports and promoting domestic manufacturing. The US has raised concerns about QCOs. The other sticking point is NTFs, which block market access to several US products. India, for which both NTBs and QCOs as crucial for protecting its domestic industries, is unlikely to relax them.

Energy Imports are about India's strategic autonomy

In meeting its energy demands, India has been importing from countries the West sees as enemies, particularly Russia and Iran. But India is very clear that national interest will guide its energy purchases. These imports, such as petroleum from Russia, are cheaper for India. India has tied its energy trade with its strategic autonomy. This is not an area India can compromise.

These positions align with India’s broader trade policy, which prioritises protecting domestic industries, ensuring food security, and maintaining a favourable trade balance.

India, meanwhile, remains open to offering concessions in other areas. This includes cuts in tariffs on automobiles and American whiskey, or duty concessions for textiles, leather, footwear, and auto parts.