US-India Trade Talks: Dairy and Agriculture Emerge as Core Sticking Points
As India intensifies negotiations for a strategic trade agreement with the United States, key hurdles remain in the agriculture and dairy sectors, which are long-standing points of contention in bilateral discussions. During Commerce Minister Piyush Goyal’s ongoing visit to Washington, D.C., the focus has shifted to resolving these sensitive issues as both sides aim to finalise an “early harvest” trade deal.
Former Indian Ambassador to the WTO, Jayant Dasgupta, highlighted the complexity of the negotiations, especially regarding dairy imports.
“We will not allow the common dairy products to come in,” Dasgupta told a news channel.
He clarified that only specialised dairy products such as high-end cheeses, which have limited demand in India, may be considered for import under tightly regulated conditions.
The Indian dairy industry, dominated by small farmers and cooperatives, remains cautious of U.S. imports due to differences in production standards, particularly around genetically modified (GM) feeds used in American dairy farms. India has reiterated its refusal to accept GM-based imports, although Dasgupta mentioned there could be leeway for non-GM certified items.
Another pressure point is the treatment of crops like corn and soybeans, where the U.S. is pushing for reduced tariffs. India, however, may only agree under a Tariff Rate Quota (TRQ) system, allowing limited low-duty imports while protecting domestic producers.
India has proposed a three-phase roadmap for the trade pact:
- An interim deal by July 8.
- A second phase, around October 2025, covering 19 additional sectors.
- A comprehensive agreement that would need U.S. Congressional approval, especially for reversing Trump-era tariffs.
While India is advocating a zero-for-zero tariff framework, the U.S. has so far insisted on maintaining a 10% duty on Indian goods. Dasgupta views this as potentially beneficial, especially if U.S. tariffs on competitors like China and Vietnam remain unchanged.
📌 Strategic Opportunity: A Quota-Based Approach for U.S. Dairy Imports
Despite a firm stance against unrestricted dairy imports, India’s current import data reveals a pragmatic openness to high-value dairy ingredients from the United States—such as whey protein concentrates, milk albumin, and lactose syrups. In 2024 alone, India imported over 4,627 metric tonnes of milk albumin and substantial volumes of lactose-based products from the U.S., highlighting the market demand for specialized, value-added dairy inputs.
Industry experts argue that a Quota-Based Tariff Rate (TRQ) mechanism could provide a middle path. Under this framework, India could allow limited volumes of U.S. dairy ingredients—specifically those not produced at scale domestically—at reduced tariff rates. This would support India’s food processing, health supplement, and nutraceutical industries, while safeguarding the broader dairy ecosystem from market disruption.
“A well-calibrated TRQ for specialized dairy ingredients like whey proteins and milk albumin can help balance India’s industrial needs with rural dairy protection,” says a senior policy analyst from Jordbrukare India.
With a clear regulatory distinction between consumer dairy products and industrial ingredients, India could build trade goodwill while reinforcing its dairy self-reliance strategy. Such a model would mirror existing practices seen in countries like Poland and New Zealand, where large dairy import volumes are managed effectively without undermining local production.
Despite progress in high-level meetings with U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, agriculture and dairy remain sensitive zones requiring strategic negotiation and sectoral protection. As both sides push for a landmark agreement, India is expected to continue defending its dairy sector, a key pillar of rural livelihoods and food security.
