India may hike import duty on milk to 60%: Pawar

While the World Trade Organisation (WTO) regime has opened up doors for the Indian dairy sector abroad, it has poised several threats as well for domestic players.

While countries like the US and several European nations have created obstacles against import of milk and milk products by hiking import duty up to 600 per cent, India is keeping duties as low as to level of 40 per cent, which may be hiked to 60 per cent.

"Our doors too are opened for them. There are opportunities as well as threats. There can be serious repercussions in the milk sector if we are not careful. India would not hesitate to hike import duties on milk and milk products in order to protect the country's dairy sector. However, if imported milk and milk products threaten to flood the Indian markets, I will not hesitate in revising the duty structure at the earliest," said Sharad Pawar, Union minister of agriculture, consumers affairs, food and public distribution.

He was in Anand on Sunday on the occasion of the foundation day of the Kaira District Co-operative Milk Producers Union Ltd.

"Milk from the Netherlands, cheese from New Zealand and butter fat from the US, is how the daily requirement of milk and milk products of an average household in India seems to be met in the coming years, with the quantitative restrictions and the import curbs on the import of milk and milk products being gradually phased out, India is sure to be inundated with powder milk and milk products," he said.

The cheap and highly subsidised milk has already created a political upheaval in states like Punjab.

The earlier government has announced a two-tier import duty structure for milk, which the present government is finding difficult to implement.

However, the imposition of a 60 per cent duty on milk powder imports after allowing for 10,000 tonne at 15 per cent duty is unlikely to stop the flood of imports.

"It is not as if the country is faced with milk shortage that calls for increasing imports to meet the growing domestic requirement. In recent years India has emerged as the biggest producer of milk with an output of 90 million tonne, outpacing the US," Pawar said.

Indian milk production, however, in contrast to other milk producing countries, is characterised by millions of small and marginal farmers including landless milk producers for whom dairying is not only a business but also the main source of employment.

India is the only major milk producer, which has a negligible share in international milk trade, even with 90 million tonne of production, Indian export of skimmed milk powder and butter has rarely exceeded a few hundred tonne, he said.

In contrast, the world's biggest exporter, New Zealand, with an annual milk production of a mere 12 million tonne, exports about 4.5 million tonne of milk powder. This is essentially because India has a huge domestic market whereas the limited domestic market gives industrialised countries the added incentive to export, Pawar said.

He said: "With the high-level of protection provided to milk producers by the developed countries that even with the stipulated reduction in both the volume and the amount of subsidies, the EU and the US can continue to flood and dump its highly subsidised milk and milk powder onto the unsuspecting developing countries, which have little safeguard mechanisms to protect their small dairy producers."

"Most of the small and marginal farmers, in the rural regions were dependent on the milk sector than on any other sector. It was the vision of the late Sardar Vallabhbhai Patel, which resulted in the white revolution, ushered in by the co-operative movement. While many regions of the country witnessed mass suicides by farmers, areas where milk co-operatives were vibrant remained untouched through worst drought and low productivity. The milk sector should learn from the example of Amul and focus more on branding and marketing," said Pawar.

India was the world's top milk producer, but the productivity needs to be increased as it remained low at 990 kg per lactation, compared to the world average of 2,030 kg.