Dairy Divide

Despite bold trade moves, India's dairy sector remains off-limits as a mix of protectionism and concerns over rural job loss continues to shape FTA negotiations

- Pushpita Dey

In a season of tariff tensions, trade wars and negotiations, India has pulled out a trump card of an entirely unexpected kind. On May 6, India and the UK finalised a free trade agreement (FTA), following 15 rounds of negotiations over three years.

On the face of it, there is much to cheer about. Under the deal, which is the UK’s most substantial trade pact since Brexit, 99% of India’s exports will face no duties. In the shifting landscape of global trade, this arrives as welcome news for exporters across a range of indus-tries—textiles, gems and jewellery, marine products and spices—who will now have unprecedented access to the UK market.

Another group of producers is also breathing easy for now—but for a distinctly different reason.

The dairy sector has been kept out of the purview of the deal on account of its sensitivities involving small farmers. Long viewed as politically influential and economi-cally sensitive, dairy has historically pushed back against measures to open up the sector, citing livelihood risks to small farmers.

This resistance has often trans-lated into special protections or leaving the sector out entirely from trade deals. In 2019, India dropped out of the Regional Comprehensive Economic Partnership (RCEP) partly due to fears over the dairy sector's exposure to dominant players. In India-EU FTA talks as well, dairy remains a sticking point.

Protectionist stance apart, this objection is also an indication of the formidable influence wielded by the dairy lobby. But as India dashes towards trade liberalisation, are entrenched domestic interests hindering its global ambitions?

Domestic Compulsions