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New Delhi, India – A recent report by the State Bank of India (SBI) has raised concerns about the impact of opening India’s dairy sector to U.S. imports, estimating a potential loss of $12.3 billion (Rs 1.03 lakh crore) for Indian dairy farmers. The report highlights the risks of easing import restrictions, which could threaten the livelihoods of millions of small-scale farmers who form the backbone of India’s dairy industry.
India, the world’s largest milk producer, accounts for about 25% of global milk production, with an output of 239 million metric tonnes in 2024. The sector supports over 80 million farmers, many of whom rely on dairy farming as their primary source of income. In contrast, the U.S. dairy industry, while producing around 104 million metric tonnes annually, operates with just 24,470 large-scale farms, heavily subsidized by approximately $10 billion in government support each year.
The SBI report warns that allowing U.S. dairy products into India without restrictions could flood the market with cheaper imports, undercutting local prices. This would hit small farmers hardest, as they lack the financial cushion to compete with subsidized U.S. products. “The competition is not fair,” said R.S. Sodhi, president of the Indian Dairy Association. “The U.S. provides massive subsidies to its dairy farms, while Indian farmers receive none. Opening the market could destabilize our dairy sector and put millions of livelihoods at risk.”
India’s dairy industry is a critical part of its economy, contributing 5% to the national GDP. The sector has thrived due to strong domestic demand and protective trade policies, including high tariffs on dairy imports. In 2023, India imported $363 million worth of dairy products globally, with U.S. exports to India valued at just $39 million, mainly for non-food items like milk albumin and lactose used in pharmaceuticals. However, the U.S. is pushing for greater market access, which could increase its share of India’s dairy market.
The report suggests that India could consider allowing imports of specialty dairy products, such as certain cheeses not produced locally, to balance trade relations without harming farmers. For example, the U.S. and Europe produce over 900 types of cheese, while India produces only 10 to 12 varieties. Experts argue that importing niche products could meet consumer demand without threatening the core milk market.
The Indian government is cautious about changing its dairy policies. A senior official emphasized that any trade agreement must protect the interests of small farmers. “We are open to discussions, but the stability of our dairy sector is non-negotiable,” the official said. Programs like the National Dairy Development Scheme and White Revolution 2.0 are already in place to boost local production and improve infrastructure, aiming to increase milk output to 300 million tonnes by 2025.
As trade talks with the U.S. continue, the SBI report underscores the need for careful policymaking. With millions of rural livelihoods at stake, India faces a delicate balancing act between global trade pressures and protecting its dairy farmers.
Disclaimer: The figures and insights are based on the referenced SBI report and industry data. The article reflects concerns raised by stakeholders but does not endorse any specific policy action.
