GTRI Warns! Why India Should Rethink a Full-Scale Trade Deal with the US?

At a time when global trade winds are shifting, alliances are evolving, and economies are looking to secure their positions in the post-pandemic world order, a familiar but tricky proposition has resurfaced — a Free Trade Agreement (FTA) between India and the United States. While this idea may sound promising to the uninitiated, a recent analysis by the Global Trade Research Initiative (GTRI) raises some critical red flags — and it’s got everyone talking.

So, what’s the buzz about? Why is GTRI, one of India’s leading trade think tanks, strongly urging policymakers to avoid a full-scale trade pact with one of the world’s largest economies? And what could this mean for India’s domestic industries, farmers, small retailers — and even its startup ecosystem?

TICE decodes this, piece by piece.

The Trade Tease: Trump's 90-Day Pause & What It Signals

Former US President Donald Trump, who’s gearing up for another shot at the White House, recently proposed a 90-day pause on tariffs — a gesture aimed at opening the doors for fresh trade negotiations. This move, seen as a softening stance amid ongoing global trade tensions, is being viewed by many as an opportunity.

But opportunity for whom?

According to GTRI, India must tread with caution. In its latest report, the think tank issued a blunt warning — India should avoid entering into a comprehensive FTA with the US, calling such a move potentially damaging for the Indian economy across multiple key sectors.

The Hidden Costs of a Full-Scale FTA

The GTRI report doesn’t mince words. A comprehensive deal, it argues, would come with strings attached — strings that could pull down the very sectors that form the backbone of India’s economy.

Let’s break that down:

• Agriculture: One of the most contentious areas. The US is expected to push for the dilution of India's Minimum Support Price (MSP) system — the very foundation that ensures price protection for Indian farmers. There’s also pressure to allow genetically modified (GM) food imports and reduce agricultural tariffs.

• Pharmaceuticals: India’s thriving generic drug industry could face setbacks if patent rules are revised to align with US demands, giving more power to American pharma giants.

• Automobiles: GTRI cautions that reducing import duties on automobiles — another expected US ask — could replicate the downfall of Australia’s auto industry in the 1990s, where local manufacturing collapsed after similar tariff cuts.

• Retail & E-commerce: There’s concern over the US lobbying to let giants like Amazon and Walmart sell directly to Indian consumers, potentially squeezing out millions of small Indian retailers.

All of these, the report warns, could lead to severe economic consequences — hitting farmers’ incomes, compromising public health and food safety, and threatening the biodiversity that India fiercely protects.

Why GTRI Is Pushing for a Smarter, Narrower Deal

Instead of going all-in, GTRI proposes a “Zero-to-Zero” tariff agreement — a far more focused trade pact that covers 90% of industrial goods without spilling over into sensitive sectors like agriculture and pharma.

This model is not new. It has already been floated by the European Union to the US, and it offers a cleaner, safer route for India to engage in global trade without compromising its national interests.

“India must avoid a comprehensive FTA with the US, as it would involve damaging concessions,” the report clearly states. “A targeted 'Zero-for-Zero' approach on industrial goods is the better path.”

Trump’s Past Reactions: A Word of Caution

Interestingly, the report also revisits the not-so-diplomatic language used by Donald Trump when India offered unilateral trade concessions in the past — he famously dismissed such gestures as “kissing my a**.”

This blunt reminder underlines the need for India to stop making one-sided offers and instead, negotiate from a position of strength and strategic clarity.

What Should India Focus On Instead? GTRI’s Roadmap

Rather than getting entangled in a complex US FTA, GTRI recommends that India turn its gaze elsewhere — towards partners who offer mutual value without demanding too many policy-level sacrifices.

Here’s who’s on the radar:

• European Union, United Kingdom & Canada: More balanced trade opportunities and diplomatic equations.

• Japan, South Korea & ASEAN Nations: Strong tech collaborations and regional synergies.

• China & Russia: While geopolitically sensitive, these countries offer massive scope for building joint value chains — especially in chemicals, electronics, and machinery.

Imagine Indian and Chinese companies co-developing electronics, leveraging each other’s raw materials and components — that’s the kind of long-term collaboration GTRI envisions.

Why This Matters for India’s Startup & MSME Ecosystem

Let’s bring it home for the Indian startup world.

Comprehensive FTAs that open the floodgates to large multinationals can sometimes crush emerging businesses, especially in sectors like agri-tech, e-commerce, consumer goods, and EVs. If MSP is weakened or e-commerce barriers are lowered indiscriminately, the homegrown startups working in these areas might find themselves fighting an unfair battle.

Startups thrive in ecosystems that are protected yet competitive, nurtured yet exposed to global standards. GTRI’s call is not about isolationism — it’s about strategic globalization.

It’s tempting to believe that signing an FTA with the US could catapult India into the big league. But as the GTRI report warns, not all trade deals are made equal, and not all partners play fair.

India, now one of the fastest-growing large economies in the world and home to a booming startup ecosystem, has the leverage to choose wisely.

And sometimes, saying "no" — or at least, "not yet" — can be the wisest trade move of all.

For startup founders, policymakers, and investors, this is a moment to reflect. Trade deals aren’t just about numbers — they shape the environment in which ideas grow, businesses thrive, and livelihoods are built. Let's not trade away the future by chasing short-term wins.