As India and the United States inch closer to a bilateral trade agreement, Washington is reportedly gearing up to press for sweeping reforms in India’s trade regime — from tariff reductions to regulatory overhauls. According to the Global Trade Research Initiative (GTRI), the proposed changes could have far-reaching implications across agriculture, retail, e-commerce, and critically, the dairy sector.
🧀 Dairy Sector in Spotlight: US Push Meets Indian Cultural Red Lines
The U.S. dairy industry has long sought access to India’s high-potential market, but it faces a non-tariff wall rooted in India’s regulatory and religious ethos. Current Indian rules bar the import of dairy products from animals fed with animal-derived feed — such as butter or cheese made from cows fed on meat or bone meal — which clashes with deeply held cultural and religious values of Indian consumers.
The U.S. sees these requirements — including mandatory certification of GM-free animal feed and facility registration — as disguised trade barriers. However, Ajay Srivastava, founder of GTRI, told PTI that “India considers this policy non-negotiable.”
Expert Insight:
“Relaxing this regulation would not just impact trade policy — it could provoke severe backlash from farmer cooperatives, religious leaders, and rural consumers who drive over 70% of domestic dairy demand,” said the author, a dairy economics analyst.“It’s not just about science or safety; it’s about trust, identity, and food purity.”
🌾 Agricultural Tariffs & MSP Under US Scrutiny
The U.S. also seeks a rollback of India’s Minimum Support Price (MSP) programs for staples like wheat and rice, arguing that such subsidies distort global trade. American trade negotiators are likely to push for lower import tariffs on farm goods and removal of barriers to genetically modified (GM) crop imports.
This proposal could put India in a policy bind. While scaling back MSP might align with WTO norms, it risks undermining farmer incomes and triggering domestic unrest — something any Indian government would approach with extreme caution.
🛑 Retail & E-Commerce: Why India Won’t Budge Easily
The US also wants India to relax its restrictions on foreign-owned e-commerce giants like Amazon and Walmart, which are currently barred from inventory-based retail under Indian law. These restrictions were designed to protect India’s millions of small retailers and kirana stores from being overwhelmed by global giants with deep pockets.
Srivastava explains that India views these controls not just as protectionist, but as essential to maintaining regulatory sovereignty in a fast-evolving digital economy.
Dairy Sector Relevance:
Any shift in e-commerce policy could alter dairy product distribution models, allowing larger, direct-to-consumer supply chains — potentially disrupting small-scale dairy vendors, cooperatives, and traditional retail networks.
🏭 Remanufactured Goods & Capital Equipment: Regulatory Tensions
The U.S. has also flagged India’s stringent licensing requirements for remanufactured or second-hand capital goods. Currently, India mandates extensive technical certifications, import quantity caps, and a residual life guarantee of at least five years.
From New Delhi’s perspective, these policies are designed to prevent dumping of outdated technologies and protect local manufacturing.
🧈 Dairy Trade: What’s at Stake for India?
If India were to allow U.S. dairy imports without strict feed-source certification, it could erode consumer trust in domestically produced milk and butter — especially in premium segments like organic, ayurvedic, or desi ghee.
Furthermore, American dairy cooperatives operate at economies of scale India can’t match yet. If allowed unfettered access, they could underprice Indian cooperatives in high-value urban markets, threatening brands like Amul, Nandini, or Mother Dairy.
Analyst View:
“India’s dairy sector isn’t just an economic pillar — it’s a socio-political institution built on 80 million smallholder farmers. No policy can be considered ‘liberalizable’ unless it respects that complexity.”
