US-India trade deal , a threat to Indian Diary sector

     The visit of US President Donald Trump to India on February 24 and 25 will have contours of US-India trade deal being finalized in specific sectors, which may include allowing market access for US diary products in India. This step is considered to have a significant adverse consequence on the growing Indian Diary industry.

       The diary sector in India's overall economic scenario has the following importance.

   First, the sector provides employment to rural workforce. Also, it is a significant contributor to the national economy. Data shows that share of diary products to the Gross Value Added is much higher than the share of agriculture and allied sectors.

 Second,the diary sector plays a major role in reducing rural poverty and inequity. It also ensures food security to the rural households. Third, it play an important role in providing alternative employment opportunities throughout the year for the rural poor.

  If India goes ahead with signing the trade deal with US for allowing the market access for US diary products, India stands a high chance of losing its market. In 2017, India contributed  21 per cent of the world's milk production,thus making it the largest milk producer in the world. This has been made possible by the almost 73 million marginal and landless farmers who directly work in the dairy sector and hold, on average, two milch animals per farmer.

    Also Indian farmers enjoy favorable terms of trade in the diary arena. Thus it  is evident that despite lower milk yield India is able to produce milk at a cheaper rate.Thus, opening market access for the sector is likely to place these dairy farmers in a disadvantaged position in relation to the large-scale dairy farmers in US.