Trade performance of India in livestock products: prospects and issues under WTO regime

Though India does not want to leave any stone unturned insofar as her presence in international trade of milk and milk products is concerned, the liberalization of markets within the WTO framework, especially due to the export subsidies indulged in by OECD countries, now seen to be threatening the Indian dairy sector. The study shows that in spite of India’s dependence on import trade of butter, ghee from cow milk, cheese and curd animal fats, etc. has come down sharply over the past two decades in the face of rise in export trade in the same, the trade balance of India in these products remains negative due to higher value associated with imports as against export. India, therefore, faces significant threat in the case of import trade of some of the dairy products like butter, ghee, cheese and curd, animal fats and some other livestock based products like hides and skins. Further, consequent upon cheap imports and absence of adequate protection measures, safeguarding income and livelihood of poor farmers have emerged issues that need to be addressed by policy makers. As for scope for the expansion of Indian dairy industry in new liberalized trade regime is concerned, Indian dairy sector would be competitive only if the export subsidies on dairy products are abolished. In more relaxed market environment, the real challenge posed before Indian livestock sector would be in terms of Sanitary and Phytosanitary Measures (SPS), Agreement on Technical Barriers to Trade (TBT) and animal welfare related issues. With a view to meet these requirements - both domestically and in the world markets - modernization of supply chain encompassing producer as well as consumer is the need of the hour. India is already price competitive in the world market and when subsidies from competitive producers like USA and EU countries are removed, the situation will make India more price competitive. In case India is not able to capture the world market in the event of removal of subsidies from the modern bloc countries, the other competitors like Australia and New Zealand would capture this market and enter in a big way to flood markets with their dairy products, making us loosing our competitiveness and a great opportunity in the new trade regime.