India’s Agricultural Red Lines Stall US Trade Talks, Mirror RCEP Exit

August 9, 2025

New Delhi: In November 2019, India made a last-minute decision to withdraw from the Regional Comprehensive Economic Partnership (RCEP) — the largest regional trade agreement it had ever negotiated.

The pivot came after growing concerns in New Delhi’s policy circles, amplified by thousands of handwritten letters from women in cooperative organisations, especially dairy cooperatives in Gujarat.

These letters warned of the damaging impact RCEP could have on agriculture and livelihoods. The looming threat of cheap Chinese imports further strengthened the government’s decision.

From RCEP to US Trade Talks: Sticking to Red Lines

Today, history seems to be repeating itself as India’s trade negotiations with the United States face deadlock.

With a looming 50% tariff on Indian exports, key sticking points include dairy, agriculture, and genetically modified crops — issues the government refuses to compromise on due to their political sensitivity.

While talks were constructive until late June, a mix of “diplomatic and non-trade issues” derailed progress, compounded by tensions between Prime Minister Narendra Modi’s government and US President Donald Trump.

Tariffs and the China Plus-One Challenge

With the 50% tariffs now a reality, India can quantify the potential losses. Beyond reduced competitiveness, the bigger concern is the impact on India’s positioning as a China plus-one manufacturing alternative — a status that has boosted sectors like high-value mobile handset assembly.

The uncertainty has already been more damaging than the tariffs themselves, raising questions about India’s future trade strategy.