A major roadblock has emerged in the ambitious trade negotiations between India and the United States aimed at expanding bilateral trade to $500 billion by 2030. The sticking point? Dairy and agriculture imports, with New Delhi firmly refusing to open its dairy sector to American products it describes as incompatible with Indian cultural and dietary values.
According to government sources cited by India Today, India has drawn a “non-negotiable red line” on dairy, demanding strict certification that any imported milk must come from cows not fed animal by-products, including blood or meat.
“There is no question of conceding on dairy. That’s a red line,” said a top Indian official involved in the trade talks.
Why India is Saying No
India’s dairy sector is not just an industry — it’s a lifeline. It supports over 80 million small-scale farmers and nourishes a population of 1.4 billion people, with many relying on it as a daily dietary staple. The cultural context is equally vital: a significant portion of the Indian population is vegetarian, and the source of milk matters.
Indian officials have voiced concern that dairy from the U.S. could originate from cows fed animal remains, which would violate religious and cultural sensitivities.
Ajay Srivastava, founder of the Global Trade Research Institute (GTRI), put it bluntly:
“Imagine eating butter made from the milk of a cow that was fed meat and blood from another cow. India may never allow that.”
A report in The Seattle Times highlighted that American cattle feed often includes pig blood, chicken remains, fishmeal, and even tallow from other cattle. Such practices are deeply problematic for many in India.
US Pushback and WTO Escalation
Washington, however, sees India’s stance as an “unnecessary trade barrier”. The U.S. has raised the issue at the World Trade Organization (WTO), arguing that India’s revised dairy certification guidelines, introduced in November 2024, do not explicitly prohibit animal-based feed.
The U.S. argues that blocking dairy imports under these grounds is protectionist, and hampers trade liberalization. But New Delhi insists its concerns are not economic but ethical and cultural.
Protecting Farmers, Protecting the Future
India is the world’s largest milk producer, and its dairy economy contributes around 2.5%-3% of national Gross Value Added (GVA) — an estimated ₹7.5–9 lakh crore. Opening the sector to U.S. imports, especially at lower international prices, could be disastrous for local producers.
Farmer Mahesh Sakunde from Maharashtra told Reuters:
“If the government allows cheap imports, we will be the first to suffer. Our entire livelihoods depend on milk.”
India currently levies high import duties to protect domestic dairy:
- 30% on cheese
- 40% on butter
- 60% on milk powder
These duties make it economically unviable for countries like the U.S., Australia, and New Zealand to export dairy to India at competitive prices.
A ₹1 Lakh Crore Risk?
A report by the State Bank of India (SBI) estimates that India could lose up to ₹1.03 lakh crore annually if U.S. dairy imports are allowed without restrictions. Such a hit could destabilize the sector, triggering widespread job losses and rural distress.
Despite the setback, both sides are expected to continue negotiations on other aspects of the $500 billion trade vision, including technology, services, and energy. However, without a breakthrough on agriculture, the final agreement may be delayed.
India remains firm that cultural values cannot be compromised for trade. Whether Washington will soften its stance or look for a middle ground remains to be seen.
For now, India’s dairy farmers and cultural sensitivities remain at the center of a global trade tug-of-war.
