Stakes high for domestic dairy sector amid US tariff

The stakes remain high for India’s dairy sector amid the US administration’s push for reciprocal tariffs on India. Top policymakers of the Indian government are deeply concerned that any easing or elimination of import restrictions could disrupt the stability that the country has maintained in its dairy industry for the past three decades.

India has been the largest milk producer for over two decades, contributing approximately 25% of the global milk production and 5% to its national economy. In 2024, India’s milk production was estimated at 239 million metric tonnes (mmt). The dairy sector employs over 80 million farmers, making it crucial for many rural households, particularly small farmers.

In contrast, the US dairy industry relies on larger farms, with only 24,470 farms producing around 104 mmt of milk in 2024. The number of US dairy farms has dramatically decreased from about 6,00,000 in the 1970s. Today, over 45% of these farms have at least 2,500 cows, while smaller farms, with fewer than 1,000 cows, comprise just 35%. Devinder Sharma, an agricultural trade expert, pointed out that large US farms are heavily subsidised, which allows them to lobby for open markets in India.

RS Sodhi, president of the Indian Dairy Association, notes that the US provides around $30 billion in subsidies to its agricultural sector, with $10 billion specifically for a few dairy farms, while India offers no subsidies to its 80 million dairy farmers.

Sodhi believes the government should not give any space for relief in the dairy sector during negotiations. “Any tinker in the current dairy policy may derail our dairy sector and put millions of dairy farmers’ livelihoods at stake. After all, competition should be between equal partners, not unequal,” he explained.

In 2023, US exports of consumer-oriented ready-to-use dairy products to India were valued at $39 million. However, a report from the United States Department of Agriculture showed India’s policy restrictions and high tariffs limit the ability of the US to increase its market share in this sector.

Meanwhile, India imported a substantial amount of dairy products from around the world in the same year, totalling $363 million.

A senior government official stated, "The U.S. wants to increase its market share by pressuring India to adjust its dairy policies.”

Most U.S. exports consist of milk albumin and lactose, which are primarily used in manufacturing for non-food applications, such as pharmaceuticals and dietary supplements. Milk albumin and lactose are among the top dairy products that India imports, and these imports have increased significantly in recent years.

Experts suggest that India should allow the import of dairy products that are not manufactured domestically.

R.S. Khanna, a former director of Kwality Dairy, remarked, "The U.S. and EU produce over 900 types of cheese, while we only make 10 to 12 types. The US can be allowed to sell different cheese products which we do not manufacture."

Source : Dairynews7x7 March 30th 2025 The new Indian express by Jitendra Choubey