Thousands of people from the big farming state of Punjab were camped out on the outskirts of Delhi for a fifth day demanding that they be allowed to stage protests in the city centre against the new laws that open up India’s tightly regulated farm produce market.

Farmers who could earlier sell grains and other products only at neighbouring government-regulated wholesale markets can now sell them across the country, including to big food processing companies and retailers such as WalMart.

But farm groups and opposition parties say the government will eventually abolish the wholesale markets, where growers were assured of a minimum support price for staples such as wheat and rice, leaving small farmers at the mercy of corporate agribusinesses.

Speaking at a public rally during a visit to his political constituency of Varanasi in northern India, Modi dismissed the fears as misplaced.

“The new agricultural laws have been brought in for benefit of the farmers. We will see and experience benefits of these new laws in the coming days,” he said. He blamed the opposition for spreading rumours about the future of farmers.

The farm sector contributes nearly 15 per cent of India’s US$2.9 trillion economy and employs around half its 1.3 billion people.

The government says the deregulation of the sector will attract investment and fix the supply chains that lose a quarter of India’s produce to wastage.

But Rahul Gandhi, the leader of the main opposition Congress party, said the new laws would benefit big business and accused Modi of crony capitalism.

“Our farmers are standing up against the black laws, they have reached Delhi leaving their farms and families behind. Do you want to stand with them or with Modi’s capitalist friends?” he said in a tweet.

— Sanjeev Miglani is Reuters’ bureau chief in New Delhi.

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India, the world’s largest milk-producing nation, has traditionally restricted dairy imports to protect the livelihoods of 80 million rural households involved in the industry.

But Prime Minister Narendra Modi is trying to pull all the stops for the U.S. president’s Feb. 24-25 visit, aimed at rebuilding bonds between the world’s largest democracies. In 2019, Trump suspended India’s special trade designation that dated back to the 1970s, after Modi put price caps on medical devices, such as cardiac stents and knee implants, and introduced new data localization requirements and e-commerce restrictions.

Trump’s trip to India has raised hopes that he would restore some of the country’s U.S. trade preferences, in exchange for tariff reductions and other concessions.

The United States is India’s second-largest trade partner after China, and bilateral goods and services trade climbed to a record $142.6 billion in 2018 (all figures US$). The United States had a $23.2 billion goods trade deficit in 2019 with India, its ninth-largest trading partner in goods.

India has offered to allow imports of U.S. chicken legs, turkey and produce such as blueberries and cherries, Indian government sources said, and has offered to cut tariffs on chicken legs from 100 per cent to 25 per cent. U.S. negotiators want that tariff cut to 10 per cent.

The Modi government is also offering to allow some access to India’s dairy market, but with a five per cent tariff and quotas, the sources said. But dairy imports would need a certificate they are not derived from animals that have consumed feeds that include internal organs, blood meal or tissues of ruminants.

New Delhi has also offered to lower its 50 per cent tariffs on very large motorcycles made by Harley-Davidson, a tax that was a particular irritant for Trump, who has labeled India the “tariff king.” The change would be largely symbolic because few such motorcycles are sold in India.

Trump will be feted in Modi’s home state of Gujarat, then hold talks in New Delhi and attend a reception that the hosts have promised will be bigger than the one organized for former president Barack Obama in 2015.

Enough for Lighthizer?

But it is far from clear whether India’s offers will be enough to satisfy U.S. Trade Representative Robert Lighthizer, who cancelled plans for a trip to India this week. Instead, he has held telephone talks with Indian Commerce Minister Piyush Goyal.

The U.S. dairy industry remained skeptical on Thursday that a viable deal is at hand.

“We’re always looking for market access, but in terms of India, as of today I’m not aware of any real progress going on,” said Michael Dykes, president of the International Dairy Foods Association and a member of USTR’s agricultural trade policy advisory committee.

Dykes said the U.S. dairy industry was looking for access in viable commercial quantities.

A USTR spokesman and India’s trade ministry did not respond to requests for comment.

Privacy law complications

An Indian parliament panel is reviewing a draft data privacy law that imposes stringent controls over cross-border data flows and gives the government powers to seek user data from companies.

It is not clear whether it will be passed, or in what form, but the possibilities have unnerved U.S. companies and could raise compliance requirements for Google, Amazon and Facebook.

The draft law is not part of the trade discussions, Indian officials say, because the issue is too difficult to resolve at the same time.

“The privacy and localization piece will be raised independently and in concert with the trade discussions,” said a Washington-based source with knowledge of the U.S. administration’s thinking.

Trump on Tuesday was non-committal about sealing a trade deal before his visit. “If we can make the right deal, we’ll do it,” he told reporters.

Two U.S. sources said progress had been made on proposed alterations to the medical device price caps. India’s new import tariffs on medical devices, walnuts, toys, electronics and other products on Feb. 1 surprised U.S. negotiators, however.

The new tariffs were aimed at China, which also makes medical devices, according to an Indian government source. “We have to protect our market and our companies,” the source said.

— Reporting for Reuters by Sanjeev Miglani, Neha Dasgupta and Aditya Kalra in New Delhi and David Lawder in Washington; additional reporting by Rupam Nair in Mumbai.

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