PATNA, INDIA – OCTOBER 31: Bihar Chief Minister Nitish Kumar along with BJP national president JP Nadda, HAM party founder Jitanram Manjhi, RLM president Upendra Kushwaha and others release NDA manifesto (Sankalp Patra) ahead of Bihar Assembly elections 2025
Hindustan Times | Hindustan Times | fake images
The electoral victory of Indian Prime Minister Narendra Modi’s party in a key state will pave the way for New Delhi to make concessions related to agriculture, a central demand of American trade negotiators.
The Bhartiya Janta Party (BJP)-led National Democratic Alliance (NDA) is set for a landslide victory in Bihar with trends showing it leading in nearly 200 of the 243 seats, while the opposition is ahead in less than 30 seats, data from the election commission of India shows.
A strong, positive verdict from Bihar (India’s third most populous state and a major corn producer) is expected to encourage the government to conclude a trade deal with the United States. Such an agreement would include purchases of more agricultural products from the United States, said Amitendu Palit, senior fellow and research leader at the Institute of South Asian Studies.
However, these purchases of US agricultural products will be “formulated in a way that does not suggest that the government will back away from its commitment to domestic farmers,” he said.
Indian exports to the United States currently face some of the highest tariffs, at 50%, but the two sides have been in negotiations for a “fair trade deal.”
In September, US President Donald Trump doubled down on his criticism of India, calling trade ties with the country “a totally one-sided disaster!” Commerce Secretary Howard Lutnick later affirmed this position in an interview with Axios stating that “India boasts 1.4 billion people, but it won’t buy even a small amount of American corn.”
During Indian Commerce Minister Piyush Goyal’s visit to Washington in late September, Indian officials reportedly acknowledged that “new offers have been made,” including talks to buy corn for ethanol production.
While several rounds of trade negotiations have taken place between the two countries, with the United States since softening its stance and Trump even hinting that Washington will reduce tariffs on India, a trade deal has been elusive.
The Indian government is waiting for the Bihar elections to be over to finalize a trade deal with the United States, said Praveen Jagwani, chief executive of UTI International, adding that New Delhi has made some concessions around agriculture-related issues.
Despite the pressures of trade negotiations, substantial barriers to U.S. corn imports remain, S&P Global said in an Oct. 2 note.
India has banned imports of genetically modified crops and 94% of US corn consists of genetically modified varieties, S&P noted, adding that India’s tariff structure “imposes a 15% tariff on corn imports up to 500,000 tonnes, with rates jumping to 50% beyond that threshold.”
Relaxing these terms could raise “dumping concerns that could impact domestic farmers,” S&P said. Proposals to import corn from the United States are already causing unrest among farmers, according to local media reports in October.
The NDA’s victory in Bihar will give the government some policy space to push for regulated imports of corn that can be used as poultry feed under US-India trade talks, MJ Khan, president of the Indian Council for Food and Agriculture, told CNBC in a written statement.
However, he added that the government might not approve genetically modified corn, as farmers’ sensitivity “is still too strong.”
More major state elections will be held next year, such as in West Bengal, Tamil Nadu and Kerala (all states where agricultural lobbies are important), followed by Uttar Pradesh in 2027.
“Projecting a pro-farmer image, while balancing business interests and strategic ties with the United States, will be the BJP government’s priority,” said Palit of the Institute of South Asian Studies.
