India Defends Dairy Sector in US Trade Deal Talks
Negotiations on the long-proposed Free Trade Agreement (FTA) between India and the United States have gained significant momentum in recent weeks. While both nations aim to strengthen economic cooperation, the biggest sticking point in the deal remains India’s dairy sector.
The Indian government has made it clear that it will not open up its dairy market to American companies. Emphasising the livelihoods of over 80 million dairy farmers in the country, the Centre has firmly stated that it will not succumb to any international pressure on this front.
According to official sources, the US has long demanded access to India’s dairy market. However, India has categorically maintained that no compromise will be made at the cost of the country’s food security, farmer livelihoods, or cultural integrity.
Dairy Sector: The Backbone of Rural Economy
India’s dairy sector is not just a significant source of rural employment but also contributes substantially to the household income of rural families. Nearly 95% of the country’s total milk production comes from rural areas, involving millions of small and marginal farmers.
Economically, the sector contributes around 2.5% to 3% to the Gross Value Added (GVA), making it one of the most vital agri-based industries in the nation.
No Compromise on Farmers’ Welfare
Recently, Agriculture Minister Shivraj Singh Chouhan stated,
“We will not enter into any agreement that puts the livelihood of more than 80 million Indian farmers at risk.”
Similarly, Commerce Minister Piyush Goyal emphasised,
“India will only agree to trade deals that are based on mutually beneficial terms. The interests of our farmers will not be compromised.”
What Is the US Demanding?
The United States is reportedly urging India to open its markets for agricultural and dairy products under the FTA. American corporations are keen on gaining access to Indian consumers for their dairy, poultry, and grain products.
However, the Indian government believes that these American products are made affordable due to heavy subsidies, which could make Indian farmers uncompetitive in their own markets.
SBI Report: ₹1.03 Lakh Crore Annual Loss Feared
A recent report by the State Bank of India (SBI) warned that if India opens up its dairy market to US imports:
- Indian farmers could suffer annual losses of up to ₹1.03 lakh crore.
- Milk prices could drop by 15-20%.
- This would severely impact rural incomes and the overall rural economy.
GTRI Report: Threat to India’s Food Security
The latest report by the Global Trade Research Initiative (GTRI) has raised similar alarms. It stated that US agricultural products—especially dairy, poultry, and rice—are backed by subsidies and advanced technologies, making them highly dominant in any open market.
This could erode the competitiveness of Indian farmers and pose a long-term threat to the country’s food security.
Culture vs Trade: The ‘Non-Veg Milk’ Debate
Another major point of opposition stems from India’s cultural and religious beliefs. American dairy farms often feed cattle with meat-based feed, leading to milk that is being dubbed as ‘non-veg milk’ in India.
This practice goes against India’s deeply rooted cultural and religious sentiments, sparking strong resistance among consumers and farmer groups.
Strong Warnings from NITI Aayog and Farmer Unions
The NITI Aayog has recommended that India focus on services trade and maintain a balanced approach to trade agreements.
Meanwhile, several farmer unions and cooperative bodies have strongly opposed the FTA proposal and urged the government to protect the dairy sector from foreign competition at all costs.
Conclusion: Agricultural Interests Come First
The Indian government has made its position clear: the interests of the country’s farmers will not be sacrificed under international trade pressure. When it comes to the dairy sector, the government has no intention of opening the market to American companies, as it could severely affect farmer incomes, rural economies, food sovereignty, and India’s cultural identity.
Sources indicate that a trade agreement between India and the US could still materialise before 1 August 2025. However, it is considered certain that the government will not compromise on the interests of Indian farmers.
In the ongoing phase of policy and commercial negotiations, the government has sent a strong message — India’s agricultural interests remain paramount, and the dairy sector will remain protected from global competition, at least for now.
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