India should approach a comprehensive Free Trade Agreement (FTA) with the United States with caution, particularly if it includes agriculture and the "gold-standard" rules Washington typically seeks. This warning comes from JS Deepak, India's former chief negotiator at the World Trade Organization (WTO), who believes such a broad agreement could pose significant risks to key Indian sectors.
Deepak, who also served as Additional Secretary in the Department of Commerce, articulated his concerns during a discussion about his memoir, I Dared to Dial Differently. While a limited trade deal with the US could offer benefits, he argues that a full-fledged FTA, as demanded by the US, might prove detrimental to Indian industry and agriculture, specifically highlighting pharmaceuticals, dairy, and poultry.
Agriculture: A High-Stakes Sector
Agriculture stands out as one of the most sensitive areas in potential trade negotiations. Deepak explained that India is well-equipped for FTAs with most nations, with the notable exceptions being China and the US. He characterizes China as the "factory of the world," whose imports could overwhelm Indian industries without tariff protection. The US, conversely, demands "gold-standard" FTAs with problematic rules in several areas.
A primary concern is the US demand for extensive market access for agricultural products. Deepak cited examples like soy, corn, dairy, and poultry, warning that tariff reductions could jeopardize the livelihoods of millions. He pointed to the vast US poultry reserves, which could be "dumped" into India at very low costs if tariffs and non-tariff barriers are removed, potentially swamping India's thriving poultry industry in states like Andhra Pradesh, Karnataka, and Telangana. The dairy sector faces similar vulnerabilities.
Furthermore, Deepak emphasized the disparity in agricultural subsidies. Developed nations, including the US, provide substantial support to their farmers. If India were to reduce its tariffs while these subsidies remain, Indian farmers, 99 percent of whom are small-scale and resource-poor, would face immense pressure from cheaper American imports. The cotton industry, he noted, offers a stark illustration: duty-free US cotton could devastate Indian cotton farmers.
Pharmaceuticals and Digital Trade: Beyond Agriculture
Beyond agriculture, Deepak identified "gold-standard" rules on intellectual property rights (IPR) and digital trade as major potential pitfalls. The Indian pharmaceutical industry, a global leader in generics, relies heavily on its ability to produce affordable versions of drugs once patents expire. Deepak highlighted Cipla's pivotal role in making antiretroviral treatments accessible in Africa as a testament to this model.
However, a US FTA could introduce provisions like "evergreening" of patents, allowing multinational companies to extend patent life through minor innovations, thereby restricting the entry of generic formulations. This would significantly undermine India's generic drug industry and its capacity to provide affordable medicines globally.
Digital trade presents another area of contention. India's data localization policy aims to process domestic data within the country to foster national economic development. US demands in digital trade, however, could limit this policy space, potentially restricting India's ability to leverage its data for its own benefit and instead facilitate its transfer and processing abroad.
Limited Deal: A Prudent Path
While India and the US are currently engaged in trade negotiations, Deepak reiterated that a limited trade agreement with Washington could be beneficial. However, he maintained his firm belief that a full-fledged FTA, incorporating agriculture and the stringent "gold-standard" rules sought by the US, is not in India's best interest across industry, agriculture, pharmaceuticals, dairy, and poultry sectors.