New Delhi: India’s dairy sector will continue to remain outside Free Trade Agreements (FTAs) with developed countries until it is strong enough to compete with heavily subsidised global producers, National Dairy Development Board (NDDB) Chairman Meenesh Shah has said.
In an exclusive interaction with Fortune India, Shah stressed that protecting the livelihoods of more than eight crore dairy-farming families remains a key priority, as India’s dairy industry is largely built on smallholder farmers with limited resources.
Small farmers need protection
Shah said the structure of India’s dairy industry differs significantly from that of developed nations.
“Most Indian dairy farmers own just 2-3 cows and generally do not receive production subsidies. In contrast, dairy farms in several developed countries have 1,000 to 1,500 cows and benefit from extensive government support,” he said.
He noted that such large-scale operations enjoy economies of scale and, in some countries, even receive financial assistance during periods of lower milk production.
“India first wants its dairy farmers to build assets, expand herd sizes and become globally competitive before opening the sector to international competition,” Shah said.
Why dairy remains outside FTAs
According to Shah, India has deliberately kept dairy out of its trade agreements because unrestricted imports of cheaper dairy products could adversely affect domestic producers.
He pointed out that India’s milk production is largely consumed within the country, with domestic demand growing at nearly the same pace as production.
“We do not face export pressure because whatever we produce is absorbed in the domestic market,” he said.
Read More: Why Punjab Farmers Are Opposing the Proposed India-US Trade Deal
Shah added that India offers relatively reasonable milk prices to consumers while ensuring one of the highest procurement prices for milk producers compared with many countries.
“If imported dairy products capture the domestic market, our producers will ultimately suffer. The government recognises this challenge, which is why dairy has been kept out of FTAs,” he said.
Competition within India is healthy
While advocating protection from international competition, Shah backed greater competition among domestic dairy cooperatives and private companies.
He said the era of monopolistic markets has passed and that competition is essential to improve efficiency, product quality and consumer choice.
“There is no point in having a monopolistic market now. Competition compels organisations to become more efficient and deliver better-quality products,” he said.
Shah also called for a level playing field between dairy cooperatives and private players, adding that successful cooperatives such as Amul have demonstrated that Indian dairy organisations can compete effectively in the domestic market.
Debate gains significance amid trade talks
Shah’s remarks come at a time when concerns over the proposed India-US trade agreement have intensified, particularly among farmer organisations in Punjab and other states. Farmer unions have expressed apprehension that opening the dairy sector to foreign imports could depress milk prices and hurt millions of small dairy producers.
The NDDB chairman’s comments reinforce the government’s long-standing position of excluding dairy from major FTAs, citing the need to safeguard India’s vast network of smallholder dairy farmers until the sector becomes globally competitive.
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