New Delhi [India], August 1 (ANI): India's not giving market access to the United States in the agriculture and Dairy products sectors is likely to be the reason for not reaching on a trade agreement, noted S&P Market Intelligence report released on Friday.

The report further says, if 25 per cent tariff imposed by U.S. will remain in place beyond September 2025, India's GDP will be adjusted downwards. S&P Market Intelligence has projected India's GDP for FY 2025-26 at 6.2 per cent in July, down from a GDP growth of 6.5 per cent in FY 2024-25.

'This projection is likely to be adjusted downward if the 25 per cent tariff is implemented. Its application would leave India relatively disadvantaged versus regional competitors that have secured a lower tariff rate.'

The report noted that India is never going to offer market access for the U.S. in the agriculture and dairy products sectors as it will directly impact the farmers who represent a crucial electoral group in the country.

'The Indian government would be highly reluctant to offer market access for the US in the agriculture and dairy products sectors, making it difficult for India to reduce its tariffs on US exports of soy, corn, wheat and rice as farmers represent a crucial electoral group in the country.' noted S&P.

Other contentious areas include exposure to section 232 which includes 'national security'. Tariffs on exports of electronics and pharmaceuticals to U.S, which accounted for 12.3 per cent and 17.8 per cent of India's export to U.S. (as per export data of 2024). U.S. has given exemption or reduced rates on both of these sectors for EU deal, it will put Indian manufacturers at a competitive disadvantage unless a similar deal is negotiated with U.S.

The report further adds that import of Russian oil and defence equipment with Russia may be another issue delaying the trade agreement.

'While India would be willing to increase imports of US crude oil, the government would be unwilling to pursue this policy change specifically due to US demands. India would be instead keener to import LNG from the US, given its growing domestic demand and expanded US supply capacity, to balance India-US trade (with a US$45.7 billion surplus recorded for India in 2024).' stated S&P.

Trump has threatened a penalty on India, if it continues to import from Russia however, specifics have not been announced as of now. (ANI)