India Has Kept Dairy Out of Every Trade Deal. The US Deal Is Unlikely to Be Different

India’s free trade agreement with New Zealand came into force on Tuesday, and milk, cheese, cream, whey and yoghurt are not part of it. The world’s largest dairy exporter signed a trade deal with the world’s largest milk producer, and India kept its dairy market closed.

The exclusion is the latest entry in a pattern that now spans more than a decade of Indian trade diplomacy. With the US talks at a delicate stage, it is also the strongest indicator yet of where they are likely to end up.

Signed on April 27, the agreement gives Indian goods 100 per cent duty-free access to New Zealand, covering textiles, footwear, engineering products and pharmaceuticals. India’s side of the bargain is narrower. It has offered concessions on 70.03 per cent of its tariff lines and excluded the remaining 29.97 per cent, which include milk, cream, whey, yoghurt and cheese.

Where India has opened up, it has done so with guardrails. Apples, kiwifruit and manuka honey come in under tariff-rate quotas, minimum import prices and other safeguards. Only the margins of the dairy trade move: tariffs on bulk infant formula, certain dairy preparations and peptones phase out over seven years, and specified albumins get a 50 per cent cut inside a quota. As one analysis puts it, India separates consumer-facing dairy, which stays excluded, from industrial derivatives, which are partly opened under quotas.

The stakes are lopsided for a reason. New Zealand is a dairy powerhouse; India’s dairy sector supports more than eight crore farmers, many with small herds, and produced 247.87 million tonnes of milk in 2024-25. Earlier talks with New Zealand, begun in 2010, ran aground largely over dairy.

A consistent record

New Zealand is not an exception. It follows a template.

EFTA (2024): Commerce Minister Piyush Goyal stressed that India gave no duty concessions on dairy to Switzerland and Norway under the EFTA pact, adding that Switzerland signed the agreement without any dairy component in it.

Australia: Another dairy-exporting power got the same answer. Goyal said the sector was discussed, but India conveyed its sensitivities, pointing to the mismatch between Australia’s very large dairy farms and India’s average holding of three to four animals. Core dairy also has no tariff concession under the Australia ECTA.

The UK: The CETA with Britain follows the same line, with analysts noting that core dairy has no concession there either.

The European Union (2026): The EU deal is the biggest test of the pattern. One analysis says it excludes dairy entirely, with no tariff cuts and no quota, even though India agreed to liberalise tariffs on 96.6 per cent of its trade with the EU, the most ambitious opening it has offered any partner. The agreement still has to be ratified on the EU side.

So India has now turned down dairy access for Switzerland, Norway, Australia, Britain, the EU and New Zealand, a list that includes several of the world’s largest dairy exporters.

Why the US is likely to follow

The case for expecting the same outcome with Washington rests on three points.

First, it is already in the framework. When the interim deal was announced in February, Goyal said it was “completely protecting sensitive agricultural and dairy products,” including milk, cheese, maize, wheat, rice, soya and poultry, on which no duty concessions go to America. The commerce ministry has named dairy explicitly among the sensitive products left out.

Second, the openings are elsewhere. The framework’s proposed cuts target a range of US industrial and agricultural products; in the farm basket these are goods such as dried distillers’ grains, feed sorghum, tree nuts, fruit and soybean oil, which do not compete with village milk producers. That mirrors the New Zealand design, where India opens where it is not threatened and holds firm where it is.

Third, the politics. Over 50 per cent of India’s population relies on agriculture for its livelihood, which is why dairy is treated as politically untouchable by successive governments. A government that has refused the EU is unlikely to concede to a partner it is already being accused of bowing to.

What could change the picture

The prediction has limits. The US is a tougher counterparty than New Zealand. It also holds leverage that the others do not: Trump’s earlier tariffs reached 50 per cent, and the February deal cut them to 18 per cent in exchange for India halting Russian oil purchases and lowering trade barriers. American agriculture has a long record of pressing for access to India’s market, and the final binding agreement is not yet written. On October 15, Goyal said the first phase was in legal drafting. Details such as quota arrangements, ingredient-level concessions or future review clauses could still shift.

The opposition argues the opposite worry, that the deal was concluded on US terms and is a “complete surrender” of national interests. That makes dairy a test case: any softening would be politically costly for the government, which is itself a reason to expect it to hold.

India’s track record on dairy is unusually consistent, and it has survived pressure from partners far bigger than New Zealand. The same exclusion is already written into the US framework. Until the final text is published, “most likely” is an inference, not a certainty, but the burden of proof now sits with anyone arguing that Washington will be the first to break the pattern.