Dairy Industry in India - Assocham Report

Due to rapid increase in domestic demand for milk and milk based products, the dairy industry in India is likely to reach about Rs 5 lakh crore by 2015, according to recently published ASSOCHAM report.

Milk production in India is likely to reach around 190 million tonne by 2015 from current level of around 123 million tonne, says the report.

"India is world’s largest milk producer and accounts for approximately 20% of total milk production of the world but almost all of it gets consumed domestically,” said DS Rawat, secretary general of Assocham.

Andhra Pradesh, Bihar, Haryana, Gujarat, Madhya Pradesh, Maharashtra, Punjab, Rajasthan and Uttar Pradesh are leading milk producing States in India. 

“Growing at about 10% annually, the Indian dairy industry is predominantly controlled by the unorganised sector which accounts for nearly 85%. About 8 crore rural families across India are engaged in dairy production and the rural market consumes over half of the total milk produce,” said Rawat.

Owing to conventional dietary habits of Indian households, about 60% of milk produced is consumed in the liquid form and the remaining is consumed in the form of butter, clarified butter (desi ghee), cheese, curd, paneer, ice cream, dairy whiteners and traditional sweets.

There is enormous scope seen ahead before the dairy industry for value-added products including custards, desserts, puddings, sauces, yogurt and nectars.

Demand for processed and packaged dairy produce in urban centres is going to see a phenomenal growth due to growing population with higher disposable income and greater health consciousness.

However, upward spiralling prices and lack of fodder resulting in low yield from cattle together with lack of trained and skilled dairy farm labour, lack of proper infrastructure like cold storage facilities and lack of transparent milk pricing system are certain key problems affecting retail consumption of milk and leading to escalating milk prices in the domestic market points.

“Private sector can play a pivotal role in reducing the cost of production by employing advanced techniques to enhance productivity, provide breeding facilities for cattle and improving the health of the dairy animals apart from developing proper dairy production, processing and marketing infrastructure,” said Rawat.

Characterised by high growth rate, the domestic dairy industry provides a multi-billion dollar potential for foreign companies especially those in New Zealand and Australia. But tariff and regulatory barriers are proving to be a hindrance for foreign companies to enter Indian dairy segment, said Assocham.