Trade Discussions Hit a Cultural Wall

 Trade Discussions Hit a Cultural Wall

 India Rejects US Dairy Due to Animal Feed Regulations Tariffs, quotas, and subsidies are frequently the main causes of contention when countries negotiate trade agreements. The largest obstacle in the current trade negotiations between the US and India, however, has little to do with money; rather, it has to do with what cows eat. India has set a clear precedent: until American dairy companies modify their animal feeding methods to satisfy India's vegetarian certification requirements, there would be no imports of dairy products from the US. A pivotal point in the larger trade pact negotiations between two of the biggest economies in the world, this debate stems from profound cultural, religious, and food safety concerns.

The Reason Dairy is at the Center of the Conflict India produces and consumes more dairy products than any other country in the world. Milk is a sacred component of the nutrition and culture of millions of Indians, who view it as more than just a beverage. In Indian farming practices, cows—who are revered in Hinduism—are typically fed plant-based diets. On the other hand, dairy farming in America functions differently. Animal-based protein sources, such as meat and bone meal or animal lipids, are frequently included in cow feed in the United States. These additives are expressly forbidden by Indian food safety standards for animals that produce milk and meat, even if they are permissible in the US.

India has a very clear rule:

livestock used to produce dairy products must never have been fed internal organs, blood meal, or tissues from animal origins. This is not only a health rule; it also protects the food supply's cultural and religious integrity.

The System for Vegetarian Certification India employs a "vegetarian certification system" to uphold this idea. A green dot is placed on the packaging of products that satisfy these requirements. This accreditation mandates that the milk from dairy imports come from animals that are given only vegetarian food. This criterion is challenging for American suppliers, who are accustomed to various farming methods, to meet without completely reorganizing their supply chains. For farms built on high-protein animal feed, changing feed compositions involves extra expenses, logistical changes, and potentially even lower production.

It's Tradition, Not Just Trade 

This is not just a technological problem, as Indian negotiators have stated. "Deep social and cultural sensitivities" are at issue. In India, religious beliefs and eating habits are intimately related. Many vegetarians believe that drinking milk from cows that were fed animal waste is wrong. Ignoring this feeling could result in public backlash against the government, particularly in rural and semi-urban areas where traditional dairy farming methods are still used. Any possible economic benefit from US dairy imports would be outweighed by the political costs of loosening these regulations.

The Viewpoint of the US

India's dairy business is an appealing target for the US. The demand for cheese, butter, yogurt, and other high-quality dairy products is increasing due to the world's population of over 1.4 billion people and the expansion of the middle class. But there is pressure on dairy farmers in the US. Due to trade concerns, China, a once-significant importer of American dairy, has slapped high tariffs, reducing a market worth $500 million. It is now important to find new export markets, and India appears to be a perfect fit given its size and expansion.

The issue is that the US Trade Representative (USTR) views India's feed regulations as "onerous" and "non-science-based." The feeding methods they employ are efficient, controlled, and safe from the standpoint of the United States. They contend that India's regulations essentially exclude American goods by acting as a non-tariff barrier.

Talks Thus Far India has maintained its stance over several rounds of negotiations, according to the report that first reported this information. The vegetarian certification method and its required green-dot label have been communicated to the United States. Dairy products will continue to be excluded from the trade agreement in the absence of compliance. Other fields have made improvements, but dairy is still stuck. India is willing to lower tariffs on several fruits and nuts that aren't commonly cultivated there, such as pistachios, walnuts, and almonds. This might benefit everyone without hurting nearby farms.

The Bigger Picture of Trade Bilateral commerce between the US and India increased 11.6% to $86.51 billion in fiscal year 2025. India has a healthy trade surplus after purchasing $41.18 billion and exporting $45.33 billion worth of commodities to the US. India's biggest economic partner is the United States, and both nations are keen to increase collaboration in areas including technology, energy, defense, and agriculture. However, because it touches on issues of food security, cultural identity, and domestic politics, agriculture is sometimes the most difficult sector to negotiate in trade agreements.

Dairy's Cultural Significance in India Dairy is more than just a food group in Indian culture; it's a component of everyday meals, religious ceremonies, and festivals. Temple offerings and rites involve the usage of milk, curd, butter, and ghee (clarified butter). Dairy delicacies are a mainstay of festivals, and many Indian homes boil fresh milk every morning. The thought of eating dairy products from animals fed animal carcasses is considered not only unappetizing but also religiously improper due to this deeply ingrained cultural role. Commercial justifications alone are not enough to get over this cultural barrier.

What Takes Place Next? 

With US Vice President traveling to India to meet with Prime Minister of India, the subject is currently in the political spotlight. Although a variety of subjects will be discussed, the dairy question is probably going to be difficult to answer. 

Among the potential outcomes are: Status Quo: Dairy is still not included in the deal, and the US is unwilling to alter feeding habits. Dual Supply Chains: Some American manufacturers might set up a supply chain for India that only includes vegetarian feed. Certification Adjustment: A compromise certification that permits restricted dairy imports while adhering to Indian regulations.

Why This Is Important Not Just for Dairy This issue is a prime illustration of how local laws, customs, and values influence international trade in addition to economic factors. It also draws attention to the growing significance of non-tariff barriers, which are laws and regulations that have the power to prevent imports even in cases when tariffs are minimal. In the face of pressure from international trade, India's ability to defend its own industries and cultural norms is strengthened by standing firm. The difficulty for the US will be striking a balance between the need to respect local sensitivities and market access aspirations.

In conclusion, The dairy dispute between the US and India is about more than just milk, butter, or cheese; it's about how politics, business, and culture interact. A more comprehensive trade agreement would benefit both nations, but dairy is still a subject of contention that can call for innovative solutions or a readiness to compromise. As a reminder that even the smallest things, such as what goes into a cow's feed, may occasionally be the biggest deal-breakers in trade negotiations, India's green-dot vegetarian certification is now holding strong.