New Delhi, May 13, 2025 â The 11th round of India-European Union (EU) Free Trade Agreement (FTA) negotiations, running from May 12â16, 2025, has thrust the dairy sector into the spotlight. As India targets an interim deal by mid-2025 and a final agreement by year-end, dairy policy expert Prashant Tripathi proposes import quotas for high-value dairy ingredients like whey and lactose. Drawing lessons from the India-Australia Economic Cooperation and Trade Agreement (ECTA), Dairy Dimension News explores the quota strategy, negotiation timelines, and expected outcomes for Indiaâs $10 billion dairy industry.
Expected Negotiation Timeline
- May 12â16, 2025: 11th round, focusing on trade liberalisation and discussing dairy quotas as a potential compromise.
- JuneâJuly 2025: Interim agreement anticipated, likely deferring sensitive dairy issues but advancing quota frameworks.
- December 2025: Final FTA deadline, addressing complex issues like dairy tariffs, non-tariff barriers (NTBs), and sustainable food systems.
Import Quota Proposal
As a leading dairy policy expert, Prashant Tripathi emphasises Indiaâs role as the worldâs largest importer of whey (over 20,000 tonnes annually) and lactose (15,000 tonnes), primarily sourced from the EU for its $5 billion food processing and infant formula sectors. With the EU pushing for tariff reductions on cheese (30â40%) and skimmed milk powder (SMP, 60%), India remains protective of its domestic dairy market, which supports millions of smallholder farmers.
âIndia should implement import quotas for high-value dairy ingredients like whey and lactose,â Tripathi urges. âQuotas would allow controlled imports at lower tariffsâsay, 10â15%âwhile capping volumes to shield local producers. This ensures our food processing industry thrives without undermining farmers.â
Tripathi suggests quotas of, for example, 25,000 tonnes for whey and 20,000 tonnes for lactose annually at reduced duties, with excess imports subject to standard tariffs. This could also address NTBs, such as the EUâs stringent milk quality standards, which limit Indian dairy exports.
Lessons from India-Australia ECTA
The India-Australia ECTA, signed in 2022, offers a blueprint for controlled dairy liberalisation. Australia secured:
- Phased Tariff Cuts: Cheese tariffs reduced from 30% to 5â10% over 7â10 years, and whey tariffs from 30% to 5â15% over 7 years, with duty-free quotas (e.g., 3,500 tonnes for cheese, 1,000 tonnes for whey).
- Protected Products: SMP, liquid milk, and butter retained high tariffs (30â60%) with no quota access, safeguarding Indiaâs cooperative dairy model.
- Capped Access: Limited volumes ensured minimal disruption to local markets while supporting Indiaâs processed food sector.
Tripathiâs quota proposal aligns with this model, offering a framework to negotiate with the EU while prioritising domestic interests.
Dairy Sector Dynamics
Indiaâs dairy stance is clear: no concessions on cheese or SMP, as evidenced by the India-UK FTA, which excluded dairy entirely. The EU, a key trading partner with $54.6 billion in imports to India (April 2024âFebruary 2025), seeks greater market access. The 10th round introduced dairy-specific talks, focusing on tariffs and rules of origin, but India prioritised its 120 million dairy farmers.
Global trade uncertainties, including potential Trump-era tariffs, are accelerating negotiations. Commerce Minister Piyush Goyalâs recent Brussels visit underscored NTB reduction, paving the way for quota discussions.
Broader FTA Context
The FTA spans 23 chapters, covering trade in goods, services, and sustainable food systems. India seeks zero tariffs on labour-intensive exports and access to the EUâs services market, while the EU pushes for lower duties on wines (from 150% to 30â40%) and automobiles (from 70% to 10â20%).
What to Expect
- Quota Implementation: India should propose whey and lactose quotas in the interim or final FTA, mirroring ECTAâs controlled access model, to address EU demands while protecting farmers.
- Limited Dairy Concessions: Tariff cuts on cheese or SMP are unlikely, but quotas for high-value ingredients could emerge as a compromise.
- NTB Negotiations: India will likely challenge EU SPS measures limiting dairy exports, while the EU may demand alignment with its sustainability standards.
- Trade-offs: India could offer phased tariff cuts on EU wines (e.g., to 50% over 10 years, as with Australia) or automobiles to offset dairy resistance.
- Long-Term Impact: Quotas could boost Indiaâs food processing sector by ensuring affordable whey and lactose supplies, but robust safeguards are needed to protect cooperatives.
Industry Outlook
The dairy sector awaits clarity as talks progress. âQuotas for whey and lactose are a pragmatic solution,â Tripathi asserts, âbut India must leverage ECTAâs lessons to negotiate firmly.â With the interim agreement nearing, stakeholders closely monitor dairyâs role in this high-stakes trade deal.
Soure: Strategic Recommendations for India-EU FTA Dairy Negotiations Introduction – Jordbrukare
