As the July 9 deadline for tariff revisions looms, India and the United States appear to be inching toward an interim trade agreement. This moment is not just a policy checkpoint – it is a turning point. What was once the domain of diplomatic white papers and trade theory has become an urgent national concern. The questions are real, the consequences are far- reaching, and the outcomes will shape the future of Indian agriculture, especially dairy.
A Historical Lens: Trade as a Tool of Transformation
India's post-independence trade policy has oscillated between self-reliance and gradual openness. The early decades after 1947 were defined by a protectionist approach – fueled by the desire to shield fledgling industries and ensure food security for a large, impoverished population.
The 1991 economic liberalization was a watershed moment. Triggered by a balance-of- payments crisis, it marked India’s turn toward a more market-driven economy. Tariff reductions, foreign investment, and global integration followed. But even then, agriculture remained a sensitive sector. The Green Revolution may have increased yields, but food self- sufficiency was never to be compromised. The dairy revolution – led by Operation Flood and the visionary Verghese Kurien – was a case in point: a uniquely Indian model that empowered rural women, decentralised production, and built the world’s largest dairy ecosystem without relying on global imports.
India’s cautious stance in WTO negotiations and various free trade agreements over the past two decades – especially concerning agricultural products – reflects this deep-rooted belief:that trade must serve development, not dominate it.
Where We Are Today: Urgency and Opportunity
Fast forward to 2025. India is no longer a hesitant participant in global trade. With a $3.7 trillion economy and aspirations to become a $10 trillion economic power, we are actively shaping trade dialogues. Bilateral agreements with the UAE, Australia, and negotiations with the UK and EU underscore this shift.
Now, the spotlight is on the United States – India’s largest trading partner with goods and services trade standing at around $190 billion. The shared ambition is to scale this to $500 billion by 2030 under “Mission 500.” Yet, a full-fledged FTA remains elusive. The sticking points? Tariff concessions, digital trade, IP protection – and critically, agricultural access.
This is where India’s dairy sector finds itself at the heart of a high-stakes negotiation.
Dairy: The Living Soul of Indian Agriculture
Let’s consider the facts:
- India contributes 23% of global milk production – the largest in the world.
- Over 80 million rural households, predominantly led by women, depend on dairy for income and nutrition.
- It is India’s single largest agricultural commodity, more valuable than wheat or rice.
- It plays a crucial role in food security, rural employment, and gender equity.
These are not just statistics – they represent livelihoods, aspirations, and a socio-economic ecosystem that is uniquely Indian. Unlike the heavily subsidised and industrialised dairy sectors of many Western countries, India’s dairy industry is decentralised and inclusive. The average Indian dairy farmer owns two to three animals. Their margins are thin, their resilience is high, but their capacity to absorb shocks from global competition is limited.
Between Protection and Progress: Rethinking Trade
This brings us to a fundamental question: Can India allow innovation, investment, and integration in food and dairy without compromising the socio-economic fabric of its villages?
The answer is not black or white. We do not need to choose between global competitiveness and local empowerment. What we need is a calibrated strategy – a middle path that balances openness with safeguards.
Trade is not the enemy. In fact, a well-designed agreement with the United States could open up investment in cold chains, processing infrastructure, R&D, digital traceability, and clean technologies – critical needs for India’s agri-food ecosystem.
But this must not come at the cost of undermining our farmers with low-cost imports or standards that are unsuited to our context.
The goal should be thoughtful protection, not protectionism. Policies that cushion vulnerable segments, incentivise productivity, and enable upskilling – especially for women farmers – can create a dairy sector that is globally aligned yet rooted in rural empowerment.
The Way Forward: A Framework for Trust
To move forward constructively, any trade agreement – interim or comprehensive – must be anchored in five core principles:
1. Reciprocity and Respect: Trade must respect developmental priorities and not become a tool of one-sided access.
2. Gradual Liberalisation: Phase-wise reduction of tariffs with performance-linked safeguards can prevent disruption.
3. Investment in Ecosystems: Foreign capital must flow into infrastructure, logistics, and skill development – not just into consumer markets.
4. Standards with Sensitivity: Regulatory alignment must consider India’s local realities, especially for smallholders and cooperatives.
5. Institutional Dialogue: A permanent agri-trade working group between India and the US can de-risk future disputes and promote shared goals.
Conclusion: Designing Dignity into Trade
India’s dairy sector is not just an economic asset – it is a human infrastructure. As we walk the tightrope between ambition and caution, we must build a model that is globally competitive, locally empowering, and structurally fair.
The India–US trade conversation is not just about tariffs. It’s about trust, transformation, and the values we embed into global partnerships. Let us use this opportunity to write a new playbook – one that protects our farmers, unlocks innovation, and designs a more dignified future for Indian agriculture.
