India resists US push to open its dairy market
With a fall 2025 deadline looming for a comprehensive India-US trade pact, and negotiators deep in virtual discussions after settling terms, a potential sticking point has emerged: milk products.
According to three people familiar with the development, Indian negotiators have made it clear that unless the US changes its animal feeding practices—specifically the use of non-vegetarian feed for cattle—or adopts India’s vegetarian certification process, there will be no question of letting in American dairy products such as cheese and butter. At the same time, India has conveyed its willingness to consider tariff concessions on certain nuts and fruits, the people said on the condition of anonymity.
“In the case of dairy products, it has been raised that the feeding practices in the US differ significantly from those in India. In the US, cattle are fed with stalled feed, which includes animal-based protein sources—a practice that raises concerns in India,” said the first person.
“Indian cattle feed composition is well-known, with protein provided mainly through oil cakes, a plant-based source, while in western countries, it is not uncommon to add some animal fat,” this person added.
Queries emailed to the commerce ministry remained answered till press time.
The Indian side has told its US counterparts that the issue goes beyond trade and involves deep social and cultural sensitivities. India’s food safety rules take these sensitivities into consideration, prohibiting the use of certain animal-origin materials in cattle feed. Milk and meat-producing animals —excluding poultry and fish—cannot be fed feed containing meat or bone meal, internal organs, blood meal, or tissues derived from bovine or porcine sources.
Meanwhile, the US needs to find new markets too, since China which bought over half a billion dollars worth of its dairy products last year has raised tariff walls, after US president Donald Trump unleashed a trade war.
“Concerns over animal feed practices in the US also stem from past incidents of mad cow disease, which have heightened sensitivities around the use of animal-derived proteins in cattle feed,” said Ajay Srivastava, co-founder, Global Trade Research Initiative (GTRI). “India is the only country currently engaged in active FTA talks with the Trump administration, which remains an unpredictable negotiating partner,” said Srivastava.
“The timing may not be right for a full-scale FTA, especially when most other countries are being pushed to cut tariffs, while India faces pressure to accept wide-ranging demands—from opening its agricultural market to US agribusiness and easing dairy and GMO (genetically modified organisms) restrictions, to weakening its MSP (minimum support prices) system, loosening pharmaceutical patent norms, and allowing American e-commerce giants to sidestep India’s FDI rules,” Srivastava added.
“The US side has been informed about the systems in place for obtaining vegetarian certification—specifically, the green dot. To qualify for this label, dairy products must come from animals that are fed a strictly plant-based diet,” said the second person. The green dot on packaging indicates the food product inside is vegetarian.
An Indian delegation led by chief negotiator Rajesh Aggarwal is set to visit US this week for the second round of in-person talks, with the focus on resolving key outstanding issues such as digital tax regulations, tariff reductions and non-tariff barriers.
Additional clarity on the way forward is expected during US vice-president J.D. Vance’s India visit beginning Monday, 21 April, during which he is scheduled to meet Prime Minister Narendra Modi. The Indian delegation will be in Washington for talks over three days starting 23 April.
In its 2025 National Trade Estimate Report on Foreign Trade Barriers, the United States Trade Representative (USTR) criticized India for maintaining what it called “onerous” conditions on dairy imports. The USTR report flagged India’s requirement that imported dairy products must come from animals not fed with internal organs, blood meal, or tissues of ruminant or porcine origin—practices common in US dairy farming.
“In India, the law strictly prohibits the use of any animal-sourced material in cattle feed, including dicalcium phosphate, which must be rock-based. This is unlike many western countries where animal-origin feed additives are allowed under certain conditions. Poultry feed, however, can include animal-based ingredients,” said Suresh Deora, director of S.A. Pharmachem Pvt. Ltd, an animal nutrition manufacturer.
The USTR said these rules, which also require certification from the exporting country, lack a clear basis in animal or human health concerns. Combined with recent changes such as mandatory dairy health certificates, new facility registration rules, and persistently high tariffs, these conditions continue to limit access for American milk and dairy products in India, one of the world’s largest dairy-consuming nations, it said.
Despite India’s objection, Washington has kept the issue on the agenda in bilateral forums such as the Trade Policy Forum (TPF), pushing New Delhi to ease restrictions and allow greater market access for US dairy exporters, as per the USTR report released on 31 March.
“Tweaking duties on certain agricultural products that are not grown domestically would not hurt Indian farmers and could help move the negotiations forward. Nuts like almonds, walnuts, pistachios, and others are on the list under consideration,” said the third person.
As of now, India imposes a basic customs duty of ₹35 per kg on shelled almonds, ₹100 per kg on in-shell almonds, a 10% agriculture infrastructure development cess, a 100% duty on walnuts (both in-shell and shelled) from the US, and a 10% duty on pistachios based on the cost, insurance, and freight (CIF) value.
In 2024, US exports of agricultural and allied products to India reached nearly $2 billion, with $452 million from alcoholic beverages and $1.3 billion from fruits and vegetables. Meanwhile, India’s exports to the US were around $5.5 billion.
However, trade with the US saw a notable increase of 11.6%, rising from $77.52 billion in FY24 to $86.51 billion in FY25, as per commerce ministry data. Imports from the US also rose by 7.42%, going up from $42.20 billion to $45.33 billion during FY25. As a result, India registered a trade surplus of $41.18 billion with the US in FY25, up from $35.32 billion in the previous year—an increase of 16.6%.
Source : Dairynews7x7 April 21st 2025 The mint by Dhirendra Kumar