Opening up India’s dairy sector to US imports could wipe out ₹1 lakh crore of farmer income

Opening up India’s dairy sector to imports from the United States could lead to an annual income loss of over ₹1 lakh crore for Indian dairy farmers, according to a report by SBI Research.

The US is seeking duty concessions on products like dairy items, apples, tree nuts, and genetically modified crops.

The SBI Research report said that allowing US dairy imports could result in a 15-25% drop in domestic milk prices.

Assuming a 15% decline, total revenue loss to Indian dairy farmers would amount to ₹1.8 lakh crore. After adjusting for production costs and supply changes, the net annual loss is estimated at ₹1.03 lakh crore.

The report noted that the dairy sector contributes around 2.5-3% to the national gross value added (GVA) and employs nearly 8 crore people directly.

“…this translates one job per every 1 lakh contribution to GVA,” it said.

According to the report, a sharp decline in milk prices will severely impact small and marginal farmers, many of whom rely on dairy as their primary source of income.

The US dairy industry is heavily subsidised and uses growth hormones and genetically modified feed, practices banned in India, which could create public health conflicts if imports are allowed, the report added.

India has so far resisted giving duty concessions on dairy in any free trade agreement, including the ongoing BTA talks with the US.

Officials have repeatedly underlined that the government will prioritise protecting farmer livelihoods while pursuing a mutually beneficial trade pact.

Negotiations for the first phase of the BTA are expected to conclude by September-October this year, with an interim deal possibly before August 1 to avoid additional US tariffs.