India Protects Its Dairy Sector in Showdown with the U.S.

On September 16, 2025, India and the U.S. resumed high-level trade talks in New Delhi, the first face-to-face discussions since President Trump's 50% tariffs on Indian goods were imposed. Led by U.S. negotiator Brendan Lynch and India’s Rajesh Agarwal, these talks are seen as a potential reset in bilateral relations. However, India’s dairy industry remains a non-negotiable point, with over 80 million rural households dependent on it for their livelihood.

India is the world's largest milk producer, with an output projected to reach 216.5 million metric tons (MMT) in 2025, increasing from 211.7 MMT the previous year. The sector accounts for 31% of the agricultural GDP, with projections showing growth from USD 146.80 billion in 2025 to USD 274.09 billion by 2032, at a compound annual growth rate (CAGR) of 9.33%. The country has introduced GST reductions to boost domestic competitiveness, cutting rates on various dairy products.

Analyzing the Trade Landscape: Risks and Resilience
The negotiations are labeled positive, with Plans to address stalled issues like agriculture and dairy access along with tariff hikes. The U.S. has softened its stance, focusing on exporting premium cheeses rather than bulk dairy, yet India stands firm. This resilience reflects India's historic Operation Flood initiative and underlines dairy as a "livelihood concern," not a bargaining chip.

Strategies are highlighted for stakeholders, including traders, industrials, and suppliers, focusing on market positioning, leveraging GST cuts, and securing domestic supply chains. India aims for sustainable growth through innovations like GST relief and technological upgrades, ensuring the projected 9.33% CAGR materializes.

As talks inch toward a potential first-phase deal by late 2025, India's dairy sector remains vigilant in maintaining its market security while embracing internal efficiencies.