Will dal derail deal? New irritant looms over India-US trade talks

The ongoing trade negotiations between India and the United States, two of the world's largest democracies and economies, are often complex, reflecting diverse national interests. A recent point of contention, highlighted by US senators, revolves around India's tariffs on American pulse (dal) exports. This issue, dubbed the 'dal derail deal,' illustrates the intricate balance India seeks between fostering domestic agricultural self-reliance and engaging in international trade.

To understand this situation, we must first delve into the background of India's pulse sector. For decades, India, despite being the world's largest producer and consumer of pulses, faced a significant demand-supply gap, relying heavily on imports. This made pulse prices volatile and impacted food security, particularly for the economically vulnerable. In response, successive Indian governments have emphasized increasing domestic pulse production. Initiatives like the National Food Security Mission (NFSM) – Pulses, launched in 2007, and the Pradhan Mantri Fasal Bima Yojana (PMFBY) introduced in 2016, aimed at boosting farmer income and production, have been pivotal. By 2016-17, India achieved record pulse production, even leading to a surplus in some varieties. This shift prompted India to impose import tariffs on pulses, including yellow peas, pigeon peas (tur), chickpeas (chana), and lentils (masoor), primarily between 2017 and 2018, to protect its farmers from crashing domestic prices caused by cheaper imports.

The current 'irritant' stems from the US perspective. American pulse farmers, particularly in states like North Dakota and Montana, are significant exporters of pulses, with India historically being a major market. The imposition of tariffs by India severely impacted their exports, leading to calls from US senators to the Trump administration to pressure India into removing these tariffs. This demand is a classic example of agricultural protectionism clashing with free-trade advocacy.

Key stakeholders in this dispute include the Indian government, particularly the Ministry of Commerce and Industry and the Ministry of Agriculture & Farmers Welfare, which must balance trade relations with domestic agricultural policy. Indian pulse farmers are crucial stakeholders, as their livelihoods and incomes are directly affected by import policies. For them, tariffs offer a necessary shield against price volatility and foreign competition. On the US side, the Trump administration, through the United States Trade Representative (USTR), is the primary negotiator. US senators, representing agricultural states, are advocating for their farmers' interests. American pulse farmers and exporters constitute another key group, seeking access to the lucrative Indian market.

This issue matters profoundly for India. Economically, it's a test of India's commitment to its farmers and its food security goals. Removing tariffs could undermine the progress made in achieving self-reliance in pulses, potentially exposing domestic farmers to price crashes and disincentivizing future production. Politically, it's a delicate balancing act in India-US bilateral relations. While India seeks a comprehensive trade deal with the US, driven by broader strategic interests and addressing issues like GSP status restoration and market access for Indian goods, it cannot afford to alienate its vast agricultural base. The issue also touches upon India's stance on global trade rules and its obligations under the World Trade Organization (WTO), where agricultural subsidies and market access are consistently debated.

Historically, India's agricultural policy has been deeply intertwined with food security, a lesson learned from severe famines post-independence. The Green Revolution in the 1960s and 70s focused on wheat and rice, but pulses remained a challenge. The recent push for pulse self-sufficiency marks a significant policy shift. Constitutionally, trade and commerce with foreign countries fall under the Union List (Entry 41 of the Seventh Schedule), granting the central government the power to formulate and implement trade policies, including tariffs. India's broader agricultural policies are guided by the Directive Principles of State Policy, particularly Article 48, which encourages the organization of agriculture and animal husbandry on modern and scientific lines, and Article 39, which speaks of securing a decent standard of living for workers, including farmers.

Future implications are significant. The resolution of this 'dal' dispute will signal the extent to which India is willing to compromise its domestic agricultural protection for a broader trade deal with the US. It could set a precedent for future negotiations on agricultural products. If India maintains its stance, it reinforces its commitment to farmer welfare and food self-sufficiency, potentially leading to a more limited trade deal or continued trade tensions. Conversely, a concession might ease trade relations but could expose its farmers to greater competition. This issue is a microcosm of the larger global debate between free trade and protectionism, and India's decision will have ripple effects on its economic diplomacy and strategic partnership with the United States.