The Commerce and Industry Minister Piyush Goyal emphasised the importance of recognizing and respecting each other’s sensitivities to speed up the negotiations for the India-EU free trade agreement. Indian dairy market was valued at about US$ 131.5 billion in 2024 and is projected to grow to US$ 291 billion by 2033, with a CAGR of about 8%.
The Union Minister Piyush Goyal cautioned that India’s Free Trade Agreement (FTA) negotiations with the European Union (EU) may be at risk if the EU insists on India opening its dairy sector.
While addressing the 18th Asia-Pacific Conference of German Business in New Delhi, the Minister stated, “…if we respect each other’s sensitivities like with (the trade deal with) the UAE, Australia and EFTA, we should not encroach on issues which can hurt. For example dairy, I just cannot open up dairy. If the EU insists that I open up dairy, there is no FTA.”
According to Mr. Piyush Goyal, Brussels’ push for preferential market access to India’s US$ 132 billion dairy sector may hinder progress on a proposed free trade agreement (FTA) with India. He stressed that India’s sensitivities regarding the dairy sector, essential for the livelihoods of millions, must be respected for any trade deal to move forward. (The FTA negotiations resumed in June 2022 after an eight-year gap, with nine rounds of discussions held so far.)
He noted that India’s dairy market, valued at US$ 131.5 billion in 2024, is expected to grow to US$ 291 billion by 2033, with a compound annual growth rate (CAGR) exceeding 8%. The significant differences in per capita income and development levels between the EU and India render the dairy sector especially sensitive.
The Minister stated that while the EU has advanced technologies and innovations, India presents a vast, dynamic market with a lower cost structure, making it an ideal partner for bilateral trade. He also highlighted three key principles essential for successful FTA negotiations: mutual respect for each other’s economic conditions, sensitivity to disparities in per capita income, and support for India’s transition to a US$ 60,000 per capita economy. He pointed out that these considerations were acknowledged in recent FTAs with Australia and the UAE, which facilitated quicker agreements.
The past FTAs, including the Australia-India Economic Cooperation and Trade Agreement (ECTA) signed in 2022 and the Comprehensive Economic Cooperation Agreement (CEPA), excluded the dairy sector to protect small farmers in India.
India imposes import duties of up to 68% on dairy products, along with stringent compliance requirements that make imports impractical. Since 2011-12, the country has not allowed imports of products like skimmed milk powder.
The Minister also addressed EU initiatives, such as the Carbon Border Adjustment Mechanism (CBAM), suggesting that these extraneous issues should be managed by international organizations.
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