The necessity of this “dairy shield” is rooted in the unique socio-economic structure of the Indian landscape, where more than 80 million households depend on milk for their daily existence. Unlike the industrialized, trade-driven business models of the US or New Zealand, approximately 70 percent of India’s milk production comes from small, marginal farmers and landless laborers who typically own only one or two animals. For these stakeholders, dairy is not just a secondary income stream but the foundational pillar of food security and daily survival.

Opening the domestic market to heavily subsidized foreign agricultural products poses an existential threat to the Indian farmer. The source text highlights that unplanned market liberalization would expose local producers to subsidy-supported imports, particularly from the US, which they cannot withstand. This disparity risks triggering a collapse of domestic production, deepening rural distress, and undermining the Minimum Support Price (MSP) system, which could eventually lead to political instability and a loss of national food sovereignty.

Despite international skepticism, India has proven it can successfully negotiate trade partnerships while maintaining these exclusions. The successful execution of FTAs with Australia in April 2022 and more recently with New Zealand—both major dairy exporters—has “cemented” the government’s strategy. These agreements demonstrate that India can aggressively pursue global integration in other sectors while successfully insulating its vulnerable dairy and agricultural communities from external shocks.