The primary mechanism for these anticipated losses is a projected 15% drop in milk prices across India, should the market become more open to U.S. imports. Such a reduction would directly erode the profitability of millions of Indian dairy farmers, many of whom operate on a small scale and have limited economic buffers. This direct hit to farmer income underscores the potential for widespread rural economic disruption, significantly impacting dairy economics at the grassroots level.

Furthermore, the SBI report anticipates a substantial increase in dairy imports, estimating a surge of approximately 25 million tons annually if the trade deal is enacted. This influx of foreign milk products would directly displace domestic production, severely affecting the livelihoods of an estimated 80 million smallholder farmers. The cumulative impact on their incomes and the overall health of the Indian milk sector is a major point of contention in the trade negotiations.

The report’s comprehensive assessment estimates that the entire Indian milk sector could face losses up to ₹1.8 lakh crore, with the brunt of this financial blow disproportionately falling on the farmers themselves. This suggests that the ripple effects would extend beyond direct farm gate prices, impacting the broader value chain from collection to processing and retail, challenging the stability of the entire dairy supply chain in India.