There is talk of ramped-up discussions in the India-US Trade Deal, with the Indian team arriving in Washington once more. There is an anticipation of a major announcement before President Trump's tariff deadline on August 1, 2025. It's important to note that issues related to the agriculture and dairy sector are stalling the deal, with the U.S. demanding access for its products.
India remains resolute in this matter, with the government clarifying that it will not compromise on farmers' interests under any pressure. India's stance is backed by solid reasoning. According to the latest SBI Research report, opening the dairy sector exclusively for the U.S. could become a cause of concern for the country's 80 million farmers.
Potential Losses for Dairy Farmers
The SBI Report, backed by statistics, discusses the adverse effects on farmers if the dairy sector is opened to the U.S. It states that opening India's dairy sector to U.S. imports could lead to a direct annual loss of ₹1.03 trillion for Indian dairy farmers. The report further highlights that the Indian dairy sector plays a crucial role in the rural economy and contributes about 2.5-3% to the national Gross Value Added (GVA), approximately ₹7.5-9 trillion.
According to SBI, this sector directly employs around 80 million people in India. If India opens its dairy sector to U.S. dairy products, it would directly affect domestic milk prices, which could drop by 15 to 20%. Assume milk prices fall by 15%; this results in a revenue loss of ₹1.8 trillion. The changes in the supply chain would impact about 60% of this revenue on farmers, with annual losses estimated around ₹1.03 trillion.
Direct Impact on Farmers' Livelihoods
An ANI-published SBI Research Report concludes that while opening the dairy sector could result in extensive economic and strategic cooperation with the U.S., the negative impact on Indian farmers cannot be ignored. Opening the Indian market to U.S. dairy products, with substantial subsidies, would have a direct effect on small farmers dependent on the dairy sector, potentially increasing milk imports by 25 million tons annually. This has become a significant issue stalling the India-US Trade Deal.
No Compromise from the Government
A report from the Global Trade Research Initiative (GTRI) recently highlighted the severe threat to India's agricultural economy from heavily subsidized U.S. exports like dairy, poultry, GM soybeans, and rice, which could weaken food security. The potential farmer losses are a key reason why India is unwilling to take any risks on this issue.
Previously, India's Commerce Minister Piyush Goyal stated that an FTA should be beneficial to both India and the U.S., while Agriculture Minister Shivraj Singh Chauhan asserted that trade deal decisions would not be made under pressure but finalized with Indian farmers' interests in mind.
