Home Article India Ready to Allow US Dairy Imports with Riders

India Ready to Allow US Dairy Imports with Riders


India is ready to allow dairy imports from the US, if Washington can guarantee that those don’t violate religious sentiments here, said an official aware of the discussions. India, where dairy products are an integral part of the Hindu methods of worship, requires these be derived from animals which have never consumed any feeds containing internal organs, blood meal, or tissues of ruminant origin.

New Delhi has told Washington that it would open its market for US dairy products, provided veterinary officials certify that the source animal was not raised on feed made of bovine extracts. While other dairy exporters to India have complied with this requirement based on religious and cultural grounds, the US administration has been resisting mandatory certification. “We have reiterated that the US can explore similar mechanisms of certification as Australia, New Zealand and the EU,” the official said.

Greater market access for its dairy products is one of the demands that the US has raised with India during bilateral trade discussions. The US dairy industry claims that if India provides market access, exports would increase by up to $100 million (Rs 700 crore).

India reiterated its stand in a fresh communication to the US last week, asking it to resolve all bilateral trade issues “in a beneficial manner … in an agreed upon framework”.

Multiple Issues

The two countries are negotiating a mutually agreeable bilateral trade package to resolve a plethora of contentious issues, including the one on ICT (information and communication technology) products.

Washington has demanded lower rates on seven tariff lines, including mobile phones, smart watches and telecom network equipment. The import duty on these is 20%, yielding revenue of $3.2 billion to India. However, India has explained that concessions can’t be given on two grounds. One, the US exports to India of these products are just about 2% of India’s total imports in this category, and unlikely to have any significant benefit to Washington.

Second, since India can’t give tariff cuts only for the US, as such concessions have to be given on the most favoured nation basis under the global trade rules, China too will benefit from the incentive. India is grappling with a ballooning trade deficit with China and the move will cause further economic stress and hurt the ‘Make in India’ drive. “We are discussing a bouquet of issues in the package,” the official said. Another issue pertains to GSP (Generalised System of Preferences), a scheme of preferential benefits to Indian exports, and reducing the US’ trade deficit with India.

“The GSP issue is also on hold and will be a part of the package,” said another official.

The wide-ranging trade issues are likely to be taken up when commerce and industry minister Suresh Prabhu meets US commerce secretary Wilbur Ross on February 14 here for the India-US Commercial Dialogue, wherein discussions between India Inc and major American businesses will aim at resolving the US concern of trade deficit with India.