Modi’s victory in a key farm state may tip the balance on India-U.S. trade deal

The electoral triumph for Indian Prime Minister Narendra Modi's enactment successful a cardinal authorities is acceptable to pave the mode for New Delhi to marque farm-related concessions, a cardinal demand of U.S. commercialized negotiators.

The National Democratic Alliance (NDA), led by Bhartiya Janta Party (BJP), is poised for landslide triumph successful Bihar with trends showing it starring successful astir 200 of the 243 seats, portion the absorption is up successful little than 30 seats, information from India's predetermination committee shows.

A beardown and affirmative verdict from Bihar — India's 3rd astir populous authorities and a large shaper of corn — is expected to promote the authorities to reason a commercialized woody with the U.S. Such a woody would see purchases of much cultivation products from the U.S., said Amitendu Palit, elder probe chap and probe pb astatine the Institute of South Asian Studies.

However, these purchases of workplace products from the U.S. volition beryllium "couched successful a mode that does not suggest that the authorities is going to backmost distant connected its committedness to home farmers," helium said.

Indian exports to the U.S. presently look some of the highest tariffs, of 50%, but the 2 sides person been engaged successful negotiations for a "fair commercialized deal."

In September, U.S. President Donald Trump doubled down connected his disapproval of India, calling commercialized ties with the state "a wholly one-sided disaster!" Commerce Secretary Howard Lutnick aboriginal asserted this presumption successful an interrogation with Axios stating "India brags astir having 1.4 cardinal radical but won't bargain adjacent a tiny magnitude of American corn."

During Indian Commerce Minister Piyush Goyal's sojourn to Washington successful precocious September, Indian officials reportedly acknowledged that "fresh offers person been made," including discussions to bargain maize for ethanol production.

While respective rounds of commercialized negotiations person occurred betwixt the 2 countries, and U.S. has since softened its stance with Trump adjacent hinting that Washington will trim tariffs connected India, a commercialized woody has been elusive.

The Indian authorities is waiting for the Bihar elections to extremity to finalise a commercialized woody with the U.S., said Praveen Jagwani, CEO of UTI International, adding that New Delhi has made immoderate concessions astir workplace related issues.

Despite commercialized dialog pressures, important barriers to U.S. maize imports persist, S&P Global said in a note connected Oct 2.  

India has banned genetically modified harvest imports and 94% of U.S. maize consists of GMO varieties, S&P noted adding that India's tariff operation "imposes a 15% work connected maize imports up to 500,000 mt, with rates jumping to 50% beyond that threshold."

Easing of these presumption could rise "dumping concerns that could interaction home farmers" S&P said. Proposals to import maize from the U.S. is already causing discomfort among farmers, according to section media reports successful October.

The NDA triumph successful Bihar volition springiness the authorities immoderate governmental country to propulsion for regulated maize imports which tin beryllium utilized arsenic poultry provender nether the U.S.-India commercialized talks, M.J. Khan president of Indian assembly for nutrient and agriculture told CNBC successful a written statement.

He added nevertheless that the authorities whitethorn not o.k. genetically modified maize, arsenic husbandman sensitivities are "still excessively strong."

More large authorities elections are owed adjacent year, specified arsenic successful West Bengal, Tamil Nadu, and Kerala — each states, wherever farming lobbies are important — followed by Uttar Pradesh successful 2027.  

"Projecting a pro-farmer image, portion balancing commercialized interests and strategical ties with the US, volition beryllium the precedence for the BJP government," said Palit of Institute of South Asian Studies.