Opening up India’s dairy sector to US imports under the proposed trade agreement could spell a massive ₹1.03 lakh crore annual revenue loss for Indian dairy farmers, warns a new report by the State Bank of India (SBI). The report cautions that a 15% drop in domestic milk prices, spurred by the influx of heavily subsidized US dairy products, could severely impact both farmer incomes and the nation’s milk supply chain.
“If we assume a 15% drop in domestic milk prices, the total revenue loss would be around ₹1.8 lakh crore. With farmers typically earning 60% of that, the estimated direct loss to them stands at ₹1.03 lakh crore,” the SBI Economic Research Department said. The report also projects a Gross Value Added (GVA) loss of approximately ₹51,000 crore.
The price decline is expected to trigger a 14 million tonne surge in domestic demand, even as supply contracts by 11 million tons, leaving a deficit of 25 million tons that would likely be met through imports.
SBI’s findings underscore the potentially “significant costs” of opening India’s agricultural and dairy sectors to the US, particularly for small and marginal farmers who form the backbone of India’s dairy industry. In contrast, US dairy production is backed by generous subsidies and access to genetically modified feed and growth hormones, raising both economic and public health red flags.
“The use of genetically modified organisms (GMOs) and growth hormones in US dairy poses a conflict with India’s public health and food safety norms,” the report noted.
The opening of the dairy and agriculture sectors remains a key sticking point in the ongoing India-US trade negotiations. SBI argues that India’s cautious stance is “aligned to the welfare of the bottom strata” and crucial for safeguarding rural livelihoods.
While the report flags serious risks for dairy, it does highlight some possible trade gains. These include:
· Gaining up to 1% additional market share in US chemical imports, potentially adding 0.1% to India’s GDP
· Increasing apparel exports by capturing up to 5% share from countries like Japan and South Korea
· Expanding India’s high-value agri exports (e.g., organic foods, spices) from under $1 billion to over $3 billion
· Boosting exports of Ayush and generic pharmaceuticals by $1–2 billion if non-tariff barriers are lifted
· Enhancing IT and services exports if the US eases visa or outsourcing restrictions
Despite some potential upsides in other sectors, SBI’s warning presents a sobering picture of the trade-off between export opportunity and domestic agricultural vulnerability. With millions of smallholder dairy farmers at stake, the report reinforces calls for a calibrated approach to trade liberalization—one that prioritizes food security, rural employment, and public health.