On a day when Indian and American leaders highlighted that mutual tariff concessions would be part of an upcoming trade deal, a senior Commerce Ministry official said that some of those concessions were expected to come from the Indian dairy sector.
“We are not looking at hugely disadvantaging our dairy sector, but without disclosing specific elements [of the negotiations], all I can tell you is that if you can concede a little bit, say a fraction, a very small fraction of dairy, and get something else in return which could be useful for some other section of the industry, then that is what the negotiation is all about,” said Sanjay Chadha, Additional Secretary in the Ministry of Commerce. “This is the kind of thing that, you want a deal, but you don’t want to concede anything. Please understand that a balance has to be struck.”
Mr. Chadha, who has led the Indian delegation in bilateral trade talks with the U.S. over the last year, was responding to a question from The Hindu during a discussion on the Indo-U.S. economic partnership hosted by ICRIER and the American Chamber of Commerce in India on Tuesday.
The Indian trade official acknowledged that the final decision would be based on political factors, given that the dairy sector provides a livelihood to 15 crore Indian farmers, many of whom own just one or two animals. “It’s not so much an economic issue as it is a political one... economically, it may make sense to open up a small fraction of it, but it’s not going to be a purely economic call,” he said.
Farmers’ groups have been vociferous in their demand that agriculture, especially dairy, should be left out of any trade deal. According to the website of the Central Board of Indirect Taxes and Customs, import tariffs for dairy products range from 30% to 60%, with the highest levels of duties slapped on milk powder, including skimmed milk powder and milk food for babies. People familiar with the negotiations said that the U.S. is pushing for greater market access, via lower tariffs as well as the removal of import quota limits.
One issue that the Indian side has held its ground on is the requirement that imported dairy products are not derived from animals which were fed cattle feed containing non-vegetarian elements.
The demand from Australia and New Zealand for India to open up its dairy market was reported to be a major sticking point in the Regional Comprehensive Economic Partnership (RCEP) negotiations that India walked out of last year. Dammu Ravi, India’s lead negotiator at the RCEP talks, reiterated the Commerce Ministry narrative that concessions were necessary.
“The orientation is very important. Do we really want to be an exporting country or not? Because if we don’t correct that perception, then you will always be defensive. You will always think your domestic turf is the be all and end all,” he said, noting that while India had a strong position at the RCEP talks, a political call was taken to opt out. “With this U.S. deal, if we go down to the negotiating table and look at every aspect, there is immense potential for us, and on balance, you have to think, if you are giving, you will gain also. It cannot be one-sided.”