India-US Trade Talks Cancelled: Tariff Relief Delayed, Dairy Exports Face Headwinds

📰 India-US Trade Talks Cancelled Amid Tensions Over Oil and Dairy Market Access

A key round of India-US trade negotiations, previously scheduled for August 25–29, 2025, has been abruptly cancelled, delaying progress on a proposed bilateral trade agreement and tariff relief for Indian exports. This development is a significant setback for India’s dairy and agriculture exporters, who were anticipating greater access to the US market and fairer trade terms.

According to sources, the cancellation followed sharp disagreements over India’s continued import of Russian oil and resistance to opening its farm and dairy markets to US products. The talks, which had reached a fifth round, were shelved indefinitely, pushing hopes of tariff reductions beyond the current diplomatic window.

The U.S. embassy in New Delhi confirmed the development but deferred comment to the United States Trade Representative (USTR). India’s Commerce Ministry has yet to respond to requests for comment.

🧀 Dairy Access a Core Dispute in Trade Deadlock

A key sticking point in the now-halted negotiations was India’s reluctance to open its highly sensitive dairy sector to US imports. India has long maintained that such a move would disrupt its rural dairy economy, dominated by small-scale farmers and cooperatives.

On the flip side, Indian dairy exporters—especially those dealing in value-added products like ghee, paneer, and milk powder—had been pushing for tariff relief and clearer regulatory pathways into the US market.

With the talks stalled, Indian dairy products continue to face import tariffs as high as 50% in the United States—effectively limiting their competitive edge.

🗣️“The stalled negotiations are indeed a missed opportunity to expand India’s dairy footprint globally. However, this progress should not come at the cost of destabilising our domestic sector, which sustains millions of farmers. A more pragmatic approach could have been to negotiate tariff relief for our exports while selectively opening access to high-value dairy ingredients—such as whey proteins and casein—that India currently depends on imports for,” said Prashant Tripathi, Jordbrukare India

🔥 Oil Imports Trigger Fresh Tariff Tensions

The trade stalemate deepened earlier this month after the US President announced a 25% import tariff on Indian goods, citing India’s continued purchase of Russian crude oil. The tariffs, set to take effect on August 27, will affect multiple sectors—including dairy—and mark the highest rate imposed on any US trading partner this year.

India has countered by accusing the US of double standards, noting that both the US and EU continue indirect trade with Russia, while unfairly pressuring India to cut ties.

📉 Dairy Sector Setback: What the Cancellation Means

With trade talks paused and new tariffs looming, India’s dairy sector faces multiple headwinds:

• ❌ No tariff relief for ghee, butter, or milk powder exporters
• ❌ No recognition of Indian dairy quality standards in US markets
• ❌ Continued 50%+ tariffs that price Indian dairy out of major Western chains
• ❌ Stalled opportunities for cooperative-led export growth