Executive Summary
With just days left before the July 9 deadline, India and the United States are engaged in high-stakes negotiations over a proposed Bilateral Trade Agreement (BTA). The talks aim to prevent the reimposition of steep tariffs suspended earlier this year. Still, core disagreements over US demands for access to India’s dairy and genetically modified (GMO) crop markets threaten to derail progress. Indian officials remain adamant that they will not compromise on long-term food security and the livelihoods of farmers. For the dairy industry, especially, the outcome could redefine the balance between domestic resilience and global pressure.
India’s Dairy Sector: A Red Line
India has consistently excluded dairy liberalisation from all its past free trade agreements (FTAs), and the current US push to gain market access has hit the same wall. The Indian government cites several reasons:
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Rural livelihoods: Over 70 million rural households depend on dairy farming. Importing cheaper US dairy, often produced with rBST (recombinant bovine somatotropin) and genetically modified (GMO) feed, poses a significant threat to their income.
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Religious sentiments: India’s dairy sector is mainly vegetarian. Products derived from animals fed on meat bone meal or genetically modified (GMO feed are culturally sensitive and may face consumer resistance.
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Lack of reciprocity: Indian dairy exporters continue to face non-tariff barriers in the US, including overly stringent sanitary standards.
“India is not willing to budge on GMO crops or offer wide-based access to US dairy products. It’s about long-term sovereignty over our food system,” said a senior trade official.
The Looming Tariff Cliff
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On April 2, 2025, the US imposed a 26% retaliatory tariff on Indian goods but suspended it for 90 days until July 9.
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The 10% baseline tariff remains in effect.
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If the deadline passes without a deal, the 26% tariff will snap back, potentially sparking a new trade standoff.
India is demanding full exemption from the 26% tariff, particularly for labour-intensive sectors such as textiles, gems, footwear, and marine exports. The US, meanwhile, wants market access for:
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Electric vehicles
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Agricultural commodities like tree nuts, apples, and GM seeds
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Dairy and petrochemicals
What’s at Stake for the Dairy Ecosystem?
| Stakeholder | Potential Impact if Deal Includes Dairy Access |
|---|---|
| Indian Farmers | Price pressure due to cheaper US imports |
| Cooperatives | Loss of market share, brand dilution |
| Consumers | Increased product variety, but ethical concerns |
| US Exporters | Significant new market access |
Indian cooperatives, such as Amul and Nandini, have lobbied hard against any concessions. Dairy remains one of the few sectors where India holds a competitive advantage globally, making market opening a highly sensitive issue.
Strategic Autonomy vs Economic Alignment
While both nations see value in deepening strategic ties—especially amid shifting global alliances—India’s posture in the negotiations signals a broader principle: economic alignment must not come at the cost of domestic sovereignty.
“Talks are indeed tough, but we are trying to find a middle ground,” said one Indian negotiator.
Even if the July 9 deadline passes without a full agreement, both sides may aim to sign a partial or phased BTA by September or October 2025, keeping the doors open while buying time.
Conclusion: Dairy Is More Than Trade—It’s Identity
India’s position is not just about tariffs or trade flows. It is about protecting a socially embedded, decentralised model of agriculture. As global powers push for market access, India’s stand on dairy and GMOs will test its ability to balance global integration with grassroots interests.