The rationale behind India’s hardened position is rooted in the protection of its massive rural population. Tariffs on agricultural goods are considered vital for safeguarding the livelihoods of more than 700 million people, as well as for maintaining the nation’s food security and controlling price volatility. This stance is a clear signal to the international dairy community that India will prioritize the well-being of its small-scale farmers over the demands of a bilateral trade agreement.

In the dairy sector specifically, India’s refusal to budge is based on a non-negotiable policy that prohibits imports from animals fed with animal-derived feed. This is a significant point of contention, as a U.S. group has argued that this policy serves as a major trade barrier. The issue of GM foods is also a key factor, with India concerned that allowing their import could jeopardize its agricultural exports to the European Union, a market with strict regulations on such products.

The new tariffs are expected to have a substantial impact on India’s export economy. For example, Indian textiles, which previously faced a 6-9% tariff, will now be subject to a much higher total duty of 31-34%. The article reveals that these escalations are part of a broader negotiation for a bilateral trade agreement (BTA), with the ambitious goal of more than doubling bilateral trade to $500 billion by 2030.