The interim trade deal framework announced between India and the US has been presented by the government as an achievement in bilateral economic relations after almost a year-long negotiations. However, the announcement has also sparked intense political and policy scrutiny in India, with critics questioning whether the framework is overly tilted in favor of the US. The skepticism focuses on three key issues – the huge amount of the proposed $500 billion purchase from the US; Concerns over continued imports of Russian crude by India; And the potential impact on Indian agriculture.
In a media interview, Union Commerce and Industry Minister Piyush Goyal tried to allay these apprehensions by explaining the specifics of the framework. Their main argument is that the agreement reflects intention rather than obligation, preserves India’s strategic autonomy and does not compromise domestic economic or agricultural interests. Let us try to explain this to you in detail…
Import of 500 billion dollars is an estimate, not a compulsion.
The most politically controversial aspect of the Interim Framework has been India’s intention to increase its purchases of US goods to $500 billion over the next five years. Critics have seen this figure as a binding commitment that would force India to import approximately $100 billion annually from the US, which could limit the market for other suppliers and harm domestic producers.
Goyal rejected it completely. He clarified that this figure is a broad estimate based on India’s growing economic needs and the sectors where American suppliers are globally competitive. He said there is no such limit, and emphasized that India is not bound under any legal or contractual obligation to import a certain quantity or value of US goods. According to him, the interim agreement does not mandate any compulsory procurement, nor is it an annual target for India.
He stressed that business decisions will continue to be guided by the commercial logic of value, quality and demand. Making a clear distinction between intention and enforceable commitment, Goyal said that it is not mandatory for us to do so. We intend to purchase some equipment. The government’s stance is that India will buy from America only when it is economically beneficial.
The figure is big but not far from reality?
Although India has not made any commitment to buy $500 billion worth of goods from the US over the next five years, Goyal also clarified that the $500 billion figure is not extraordinary considering India’s economic progress. India’s fast-growing economy is expected to see significant growth in imports across many sectors, regardless of the US trade framework.
For example, in the steel sector, India’s production capacity is estimated to increase from about 14 million tonnes to about 30 million tonnes in the coming years. This expansion will significantly increase the demand for coking coal, most of which India imports. Currently, the import of coking coal for steel making is around $17 billion per year, but Goyal said this figure could increase to $30-35 billion per year with capacity addition. India’s bargaining position will be strengthened by diversifying its suppliers, including the US. He said that if one or two more countries start supplying it, then it would be even better. We will get a better deal. We will be able to communicate more intelligently and in a better way.
Civil aviation is another sector which is causing huge increase in imports. India has ordered aircraft worth about $50 billion from Boeing, and has also purchased a large quantity of engines and spare parts. Goyal estimated that total aviation-related imports could reach $80-100 billion in the coming years. These purchases are part of India’s civil aviation expansion and are not related to defense procurement, which he clarified has been kept out of the trade talks.
Energy imports will also continue to increase as the demand for crude oil, LNG and LPG in India is increasing year by year. In parallel, India’s demand for information and communication technology products from emerging sectors such as data centres, artificial intelligence and quantum computing is expected to increase significantly. India currently imports such products worth about $300 billion annually, but Goyal said this could increase to $2 trillion in the next five years. With its technological capabilities, the US is well positioned to supply a portion of this demand by offering competitive pricing.
Goyal said, we hope that they will offer us a very competitive price. We intend to purchase a significant amount of these products from our $2 trillion imports.
Strategic autonomy over Russian oil remains intact
Another concern raised by critics was whether the interim trade framework limits India’s ability to continue importing subsidized Russian crude. Goyal clearly denied any such connection. He said that decisions on import of crude oil are taken by domestic buyers and it is beyond the jurisdiction of the Commerce Ministry. When asked whether the framework affects India’s approach towards Russian oil, he said I do not look into matters related to it, adding that such matters are handled by the Ministry of External Affairs. Although ministries coordinate on broad policy issues, decisions related to specific sectors remain with the respective departments.
Also, Goyal stressed that diversification of energy sources, including LNG and oil, from multiple suppliers is in India’s long-term strategic interest. However, this does not mean abandoning existing sources. He stressed that the interim trade framework does not in any way dictate or restrict India’s decisions related to energy sources.
Agriculture: Sensitive safeguards while meeting demand
Agriculture has traditionally been one of India’s most sensitive sectors in trade negotiations, and the interim framework has raised fears of an increase in imports that could hurt domestic farmers. Goyal said the government has been aggressive in pursuing India’s agricultural interests while carefully protecting sensitive sectors such as dairy and key agricultural products.
A major point of contention is the proposed import of Distillers Dried Grains with Solubles (DDGS), which is a byproduct of ethanol production and is used as animal feed. Critics argue that cheap DDGS imports from America may cause losses to Indian soybean farmers. Goyal dismissed these concerns as exaggerated and emphasized that India has opened only a very limited window for such imports.
Although they declined to give exact figures, officials said domestic animal feed consumption is about 500 lakh tonnes, while the quota given to the US is only 5 lakh tonnes. Goyal clarified that the demand for DDGS has originated from the domestic industry itself, due to the rapidly increasing livestock population and the increasing need for fodder due to the decreasing cultivable land.
Goyal said that we have a huge need for DDGS and it is increasing. The quota we have accepted is very small. He further said that the animal husbandry department and industry are in great need of DDGS as it has high protein content. India currently has 194 million cows, 112 million buffaloes and total livestock population of 878 million. He said that as a government, I will have to maintain balance among all the interests.
Reality of soybean, import and competition
On the special concern of loss caused to soybean farmers due to DDGS import, Goyal stressed that soybean has been adequately protected. He also said that India already imports soybean oil worth about $5 billion every year, which has been going on since before the coming of the present government. He argued that if market access had been opened to countries like Indonesia, Japan, South Korea or Vietnam during the UPA government, greater competition might actually have led to better prices and quality for the consumer.
He said that if the UPA government had opened up something, say to Indonesia, Japan, South Korea or Vietnam, I would prefer more competition because that gives me better prices and better quality. Goyal also said that there are a very small number of agricultural products for which farmers may actually feel threatened by imports. He said that import figures show that India has been importing products like soybean oil and dry fruits for a long time.
He rejected the notion that India has arbitrarily closed its doors to certain products, and pointed out that where domestic availability is inadequate, alcohol, fresh fruits and processed food products are imported. For example, India imports about 5.5 lakh tonnes of apples annually. Goyal said there are some commodities that India needs, and argued that controlled and planned imports are not a threat to farmers but a practical solution to domestic supply shortages.