Modi’s victory in Bihar may tip the balance on India-U.S. trade deal

An election victory for Indian Prime Minister Narendra Modi’s party in a key state will pave the way for New Delhi to make concessions on agriculture, a key demand of US trade negotiators.

The National Democratic Alliance (NDA), led by Bhartiya Janta Party (BJP), is gearing up for a landslide victory in Bihar. Trends that show this According to data from India’s election commission, it is leading in nearly 200 of the 243 seats, while the opposition is ahead in less than 30 seats.

Strong and positive verdict from Bihar, India’s third most populous state big corn producer The government is expected to be encouraged to sign a trade agreement with the US, said Amitendu Palit, senior research fellow and research leader at the Institute of South Asian Studies. He said such a deal would also include the purchase of more agricultural products from the United States.

But he said these purchases of agricultural products from the United States would be considered “in a way that does not mean that the government will step back from its commitment to domestic farmers.”

India’s exports to the US currently face peak tariffs of 50%, but both sides are engaging in negotiations for a “fair trade agreement”.

In September, US President Donald Trump doubled down on his criticism of India, calling trade ties with the country a “completely one-sided disaster”. Commerce Secretary Howard Lutnick later advanced this view in an interview. axios “India boasts of having 1.4 billion people but does not buy even a small amount of American corn.”

Indian officials during Indian Commerce Minister Piyush Goyal’s visit to Washington in late September reportedly He acknowledged that “new offers have been made,” including talks to purchase corn for ethanol production.

Although there have been several rounds of trade talks between the two countries and the US has since softened its stance towards Trump, even hinting that Washington would reduce tariffs on India, a trade deal has remained elusive.

Praveen Jagwani, CEO of UTI International, said the Indian government is waiting for the Bihar elections to end to finalize a trade deal with the US, adding that New Delhi has made some concessions on agriculture-related issues.

S&P Global says significant barriers to US corn imports remain despite trade negotiation pressures on a note On October 2.

Stating that India has banned the import of genetically modified products and that 94% of US corn consists of GMO varieties, S&P stated that India’s tariff structure “imposes a 15% tax on corn imports up to 500,000 metric tons, and rates increase to 50% of this threshold.”

S&P said relaxing these requirements could raise “litter concerns that could impact domestic farmers.” Proposal to import corn from the US is already causing unease among farmers, local media reports reports In October.

The NDA victory in Bihar will give the government political space to push for regulated imports of maize that can be used as poultry feed as part of US-India trade talks, MJ Khan, chairman of the Food and Agriculture Council of India, told CNBC in a written statement.

But he added that the government may not approve genetically modified corn because farmers’ sentiment is “still very strong.”

Larger state elections will be held next year in states where agricultural lobbies are important, such as West Bengal, Tamil Nadu and Kerala, followed by Uttar Pradesh in 2027.

“Projecting a pro-farmer image while balancing business interests and strategic ties with the US will be the priority of the BJP government,” said Palit of the Institute of South Asian Studies.