India's dairy sector pushes for safeguards in US trade talks

MUMBAI: India, the world's largest milk producer, must protect millions of small dairy farmers in its trade talks with the United States to avoid market disruption from any surge in U.S. imports, industry officials said.

AI Brief

India is negotiating a trade deal with the US but refuses to open its dairy market to protect small farmers and rural livelihoods.
US wants access to India's dairy sector, but Indian officials warn it would harm local producers and lower domestic milk prices.
Cultural, economic, and dietary concerns drive India's firm stance on shielding its US$16.8 bil dairy industry from US imports.

India is negotiating a comprehensive bilateral trade agreement with the United States after Washington imposed reciprocal tariffs including a 26% duty on Indian goods, later paused for 90 days.

The United States, whose dairy exports reached $8.22 billion last year, is pushing for greater access to India's dairy market, which remains shielded by high import duties and non-tariff barriers.

"It is necessary that we do not give them very cheap access to our markets," said Jayen Mehta, managing director of the Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF), which owns Amul, the country's largest dairy brand.

"They are (intending) to dump their surplus in our country, which we cannot afford," Mehta said.

The average herd size in India is only two to three animals per farmer, compared to hundreds in the United States - a difference that puts small Indian farmers at a disadvantage, industry officials say.

India's dairy sector feeds more than 1.4 billion people and provides livelihoods to 80 million farmers, making it critical that trade negotiations do not harm milk producers, most of whom are rural poor, Mehta said.

India accounts for nearly a quarter of global milk production, with output reaching 239 million metric tons, more than double U.S. output of around 103 million tons. The Indian dairy industry is valued at $16.8 billion.

New Delhi has previously excluded the dairy sector from bilateral trade agreements and will continue to protect it, as the government recognises its role in supporting small farmers, said R.S. Sodhi, president of the Indian Dairy Association.

The country's dairy industry should also be protected due to cultural and dietary considerations, as cattle in the United States are often fed feed containing animal by-products, which does not align with Indian consumer preferences, Sodhi said.

A senior official at the federal trade ministry said India is resisting pressure from the United States to open its dairy sector in the current bilateral trade talks.

India will not surrender under any circumstances, and the dairy sector will continue to enjoy protection, said the official, who did not wish to be named since the deliberations were not public.

Removing tariffs on skimmed milk powder could encourage Indian food producers to opt for imported products, significantly reducing their milk purchases from local farmers and potentially driving down domestic prices, said Pushan Sharma, director of research at Crisil Intelligence.

He added that domestic cheese and yogurt producers would also face stiff competition from U.S. imports.

Dairy farmers say they need government protection.

"The government needs to make sure we're not hit by cheap imports from other countries," said farmer Mahesh Sakunde from the western state of Maharashtra. "If that happens, the whole industry will suffer, and so will farmers like us."