The dairy sector is considered a non-negotiable “red line” for Indian policymakers as they engage with the Office of the United States Trade Representative (USTR). As the world’s largest milk producer, India’s industry is built on a unique model of millions of small-scale farmers whose economic survival depends on the current domestic pricing structure. Government officials indicate that any potential trade framework must respect these socio-economic realities, prioritizing the stability of rural communities over the optics of a comprehensive Free Trade Agreement (FTA).

Beyond purely economic considerations, India cites significant biosafety and health concerns as barriers to US agricultural imports. The Indian government remains particularly wary of genetically modified (GM) crops, which dominate US production of corn and soybeans. These concerns extend to the dairy supply chain, where differing national standards regarding animal feed and treatment protocols create a regulatory friction that New Delhi is currently unwilling to resolve through trade concessions.

While Washington has expressed deep interest in tapping into India’s vast and growing consumer market, Indian negotiators are focusing on a more balanced and “limited” partnership. Discussions led by the Department of Commerce suggest that India prefers to decouple sensitive agricultural goods from broader agreements involving technology and industrial cooperation. This tactical positioning ensures that the most vulnerable segments of the Indian primary sector are not used as bargaining chips for gains in other economic areas.