Indian Farmers Face ₹1.03 Lakh Crore Loss if US Dairy Enters Market: SBI

The State Bank of India (SBI) report has raised serious concerns about the potential economic and social impact of opening India’s dairy and agricultural sectors to the United States under a proposed trade agreement. According to a report released Monday by the bank's Economic Research Department, such a move could significantly damage the livelihoods of millions of Indian dairy farmers and sharply escalate milk imports.

Massive Losses for Dairy Farmers and Surge in Imports

SBI estimates that if the domestic milk price drops by 15%, the total revenue loss could reach ₹1.8 lakh crore. “Assuming farmers’ share as 60% and adjusting for change in supply due to price drop, the annual loss to farmers comes around ₹1.03 lakh crore,” the report said.

Additionally, the report stated that the decline in milk prices will result in increased demand by about 14 million tonnes, while supply will fall by around 11 million tonnes, leading to a supply-demand gap of 25 million tonnes to be filled by imports.

SBI warned that this development could severely impact small dairy farmers, emphasising that “one of the significant costs of opening up the Indian agri and dairy sectors to the US would be a threat to the livelihoods of the Indian farmers.”

Health and Trade-offs: GM Concerns vs Export Opportunities

SBI highlighted another point of conflict involving the use of genetically modified organisms and growth hormones in US dairy products. “The influx of GM foods in India will also increase once the sector is opened up. This could pose public health standards conflict,” the report said.

Despite these concerns, the bank also acknowledged some strategic opportunities for India. India could boost its chemical exports by capturing a share from countries like Japan, Malaysia and South Korea. “India can seize another 1% share from these countries in chemical exports to the US, which can add 0.1% to its GDP,” SBI noted.

The report added that India’s apparel exports to the US could grow from the current 6% to 11% market share, potentially adding another 0.1% to GDP. It also flagged potential in high-value agri exports such as organic foods and spices, noting that while India currently exports less than $1 billion of these, the potential exceeds $3 billion.

“Currently, non-tariff barriers limit Ayush and generics exports; once lifted, it can increase exports of these by $1-2 billion,” SBI said. The bank also pointed out that improved access to outsourcing and visa norms could enhance India’s IT and services exports.

Read More: UPI GST Notices in Karnataka Worry Small Traders!

Conclusion

The proposed trade deal between India and the US presents a double-edged sword: offering selective export gains while threatening critical sectors like dairy and agriculture. SBI emphasised the importance of aligning trade decisions with the welfare of India’s rural population, stating, “India’s quest to safeguard its strategic interests, aligned to the welfare of the bottom strata, appears to be a prudent rationale, in sync with safeguarding of rural livelihoods.”

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