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The ongoing negotiations between India and the United States for a comprehensive trade agreement are facing a significant hurdle concerning the import of American dairy products into India. With a fall 2025 deadline in sight, both countries are engaged in virtual discussions to iron out the terms of the agreement. However, a fundamental disagreement has emerged regarding the feeding practices of cattle in the US and India's insistence on vegetarian certification for imported dairy. This issue goes beyond simple trade negotiations, touching upon deep-seated social, cultural, and religious sensitivities within India. Indian negotiators have made it unequivocally clear that unless the US alters its animal feeding practices, specifically the use of non-vegetarian feed for cattle, or adopts India's vegetarian certification process, the import of American dairy products such as cheese and butter will not be considered. At the same time, India has indicated a willingness to consider tariff concessions on certain nuts and fruits, potentially as a way to balance the demands and move the negotiations forward. The core of the disagreement lies in the differing approaches to cattle feed in the two countries. In the US, it is common practice to use stalled feed that includes animal-based protein sources. This practice is viewed with concern in India, where traditional cattle feed composition is predominantly plant-based, relying on oil cakes for protein. The inclusion of animal fat in cattle feed in Western countries raises objections within the Indian context due to religious and ethical considerations. India's food safety regulations prohibit the use of certain animal-origin materials in cattle feed, reflecting these cultural sensitivities. Specifically, milk and meat-producing animals, excluding poultry and fish, are prohibited from being fed feed containing meat or bone meal, internal organs, blood meal, or tissues derived from bovine or porcine sources. This stance is deeply ingrained in Indian society, where vegetarianism is a significant cultural and religious practice, and animal welfare is a paramount concern. The Indian government's insistence on vegetarian certification reflects a commitment to protecting these values and ensuring that imported products align with the country's ethical standards.
The US dairy industry, on the other hand, faces its own set of challenges. With China, a major importer of US dairy products, raising tariff walls in the wake of a trade war initiated by former US President Donald Trump, the US is actively seeking new markets for its dairy exports. India, with its large and growing population and a significant dairy-consuming population, represents a potentially lucrative market. However, the restrictions imposed by India regarding animal feed practices pose a significant barrier to entry for US dairy exporters. Concerns over animal feed practices in the US are further amplified by past incidents of mad cow disease, which have heightened sensitivities around the use of animal-derived proteins in cattle feed. Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI), highlighted the complexities of the situation, noting that India is currently the only country engaged in active FTA talks with the US, which remains an unpredictable negotiating partner. Srivastava also pointed out the potential pressure on India to accept wide-ranging demands from the US, including opening its agricultural market to US agribusiness, easing dairy and GMO restrictions, weakening its minimum support prices (MSP) system, loosening pharmaceutical patent norms, and allowing American e-commerce giants to sidestep India's foreign direct investment (FDI) rules. The Indian side has informed its US counterparts about the existing systems for obtaining vegetarian certification, specifically the 'green dot' label. To qualify for this label, dairy products must originate from animals that are fed a strictly plant-based diet. The green dot symbol on packaging serves as a clear indicator that the food product is vegetarian, assuring consumers that it meets their dietary requirements and ethical considerations. An Indian delegation, led by chief negotiator Rajesh Aggarwal, is scheduled to visit the US for the second round of in-person talks, focusing on resolving key outstanding issues such as digital tax regulations, tariff reductions, and non-tariff barriers.
The United States Trade Representative (USTR) has criticized India for maintaining what it considers 'onerous' conditions on dairy imports in its 2025 National Trade Estimate Report on Foreign Trade Barriers. The USTR report specifically flagged India's requirement that imported dairy products must come from animals not fed with internal organs, blood meal, or tissues of ruminant or porcine origin, practices that are common in US dairy farming. The USTR argues that these rules, along with mandatory dairy health certificates, new facility registration rules, and persistently high tariffs, lack a clear basis in animal or human health concerns and continue to limit access for American milk and dairy products in India. Despite India's objections, the US has consistently kept the issue on the agenda in bilateral forums such as the Trade Policy Forum (TPF), pushing New Delhi to ease restrictions and allow greater market access for US dairy exporters, as per the USTR report released on March 31. The Indian side maintains that its restrictions are not merely trade barriers but are rooted in deeply held cultural and religious values. Suresh Deora, director of S.A. Pharmachem Pvt. Ltd, an animal nutrition manufacturer, emphasized that Indian law strictly prohibits the use of any animal-sourced material in cattle feed, including dicalcium phosphate, which must be rock-based. This contrasts with many Western countries where animal-origin feed additives are allowed under certain conditions. While poultry feed in India can include animal-based ingredients, the restrictions on cattle feed are significantly stricter. Regarding potential concessions, India is considering tweaking duties on certain agricultural products that are not grown domestically, such as nuts like almonds, walnuts, and pistachios. These concessions could help move the negotiations forward without directly impacting Indian farmers. As of now, India imposes various customs duties and cesses on these nuts, ranging from 10% to 100%, depending on the type of nut and whether it is shelled or in-shell.
In 2024, US exports of agricultural and allied products to India reached nearly $2 billion, with $452 million from alcoholic beverages and $1.3 billion from fruits and vegetables. Meanwhile, India's exports to the US were around $5.5 billion. Overall trade between the two countries saw a notable increase of 11.6%, rising from $77.52 billion in FY24 to $86.51 billion in FY25. Imports from the US also increased by 7.42%, going up from $42.20 billion to $45.33 billion during FY25. Consequently, India registered a trade surplus of $41.18 billion with the US in FY25, up from $35.32 billion in the previous year, representing an increase of 16.6%. The dairy issue remains a significant point of contention, underscoring the challenges of navigating cultural sensitivities and differing regulatory frameworks in international trade negotiations. The outcome of these negotiations will have a significant impact on the future of trade relations between India and the US, and the resolution of the dairy issue will be a key indicator of the willingness of both sides to compromise and find mutually acceptable solutions. Additional clarity on the way forward is expected during US Vice-President J.D. Vance’s India visit, during which he is scheduled to meet Prime Minister Narendra Modi. The Indian delegation will be in Washington for three-day talks starting 23 April. The stakes are high, and the world is watching to see if these two major economic powers can overcome their differences and forge a stronger trade partnership.