The United States’ decision to impose 50% tariffs on Indian imports has sent shockwaves through India’s dairy sector, especially among exporters of casein and milk powder. India, the world’s largest milk producer with nearly 239 million metric tonnes annually, relies on export markets to balance surplus production. With the new tariffs, processors in Gujarat, Rajasthan, and Uttar Pradesh—key hubs for casein and milk powder—are bracing for falling orders and unsold inventories. This could lead to a decline in domestic milk prices, directly impacting farmer incomes across the country.
Industry voices warn of structural disadvantages. While the U.S. dairy sector receives subsidies worth $30 billion annually (with $10 billion concentrated among a few farms), Indian dairy farmers operate with no direct subsidy support. Experts, including RS Sodhi, President of the Indian Dairy Association, have urged the government not to compromise on dairy interests during trade negotiations, emphasizing the need to shield farmers from market shocks.
The tariffs, triggered by India’s continued purchase of Russian oil, add to wider economic concerns, with analysts estimating a potential 1% dent in India’s GDP growth. Prime Minister Narendra Modi has reiterated the government’s commitment to protecting farmers, but industry stakeholders stress that timely interventions—such as alternative markets, export incentives, and domestic stock management—will be crucial.
Industry Insight
The dairy export segment, particularly casein and skimmed milk powder, is highly vulnerable to trade policy disruptions due to its dependence on niche global buyers. The sudden escalation of tariffs underscores the urgency for India to diversify export destinations, strengthen value-added dairy product lines, and enhance domestic consumption channels to absorb surpluses. Without strategic intervention, falling international demand could ripple back to farmgate prices, jeopardizing the livelihoods of millions of dairy farmers.
Source : Dairynews7x7 Aug 28th 2025 from a news in Outlook India