By 2030, India is expected to contribute nearly 30% of the worldās milk production, up from its current 24%. With an annual output exceeding 240 billion litres, India is no longer just a milk-producing giantāitās a potential global dairy superpower. But hereās the critical question: Is India ready to handle a surplus dairy economyāand can it truly compete on the world stage?
While Indiaās domestic dairy success is rightly celebrated, the next phase of growthāsustainable, profitable exportsārequires more than just volume. It demands strategy, consistency, investment, and global vision.
š Indiaās Dairy Scale: A Remarkable Rise, But What Next?
From milk-deficient in the 1970s to self-sufficiency and surplus today, Indiaās dairy transformation is historic. With over 300 million cattle and 10 million producersā75% of whom are womenāIndiaās dairy sector is both socially embedded and economically vital.
However, in 2023ā24, production growth slowed to 3.8%, compared to the previous trend of 6ā7%. While this may seem like a decline, global milk production is growing at a rate of just 1% per year. In this context, India remains the worldās leading dairy producer.
By 2027ā28, India could match the combined production of the top five dairy-exporting countries: New Zealand, the United States, the European Union, Australia, and Argentina. But production without corresponding export readiness creates a dangerous imbalance.
š§± Cracks in the Foundation: Surplus Without Strategy
India produces around 600,000 tonnes of skim milk powder (SMP) annually. In a typical year:
- 350,000 tonnes are used for recombination during the lean season.
- 150,000 tonnes are absorbed into domestic food applications.
- The restāup to 100,000 tonnes or moreāremains as unutilized surplus.
In recent years, this ārolling stockā has ballooned, reaching over 300,000 tonnes at timesādepressing SMP prices, straining processor cash flows, and undercutting farmer payments.
Exporting this surplus seems like an obvious solution. However, Indian SMP lacks global competitiveness in terms ofĀ price, quality, and technical consistency. Global demand (especially from China) is soft, and Indiaās products often fail to meet the processing needs of global buyers.
ā ļø Pitfalls for Indian Dairy in Global Markets
As a dairy policy and trade expert, Iāve identified five significant challenges that Indian dairy exporters must urgently address:
1. Inconsistent Quality Standards
Global buyers demand product uniformityābatch after batch, year after year. Indiaās fragmented milk procurement system, reliance on smallholders, and limited bulk milk cooling create challenges in maintaining consistent microbiological and compositional quality.
2. Limited Product Diversification
India continues to focus heavily on Medium Heat SMP and ghee. But the world needs Low Heat SMP (for cheese making), High Heat SMP (for recombined evaporated milk), and customised dairy ingredients. Specialised equipment and R&D are essential.
3. Regulatory Hurdles
Key target markets like the EU, China, and Russia require rigorous traceability, animal health certifications, and FSMS compliance. India must strengthen its food safety systems and negotiate bilateral equivalence agreements to ensure food safety.
4. Lack of Market Intelligence & Branding
Exporting isnāt just logisticsāitās market positioning. India lacks an international dairy auction system (like New Zealandās GDT), global brand visibility (beyond Amul), or tailored B2B strategies in emerging markets.
5. Fragmented Industry Vision
Indiaās dairy policy remains inward-looking, focusing on self-sufficiency and affordability. Without aligning with export-oriented incentives, infrastructure, and trade diplomacy, we risk being left behind in a rapidly shifting global market.
ā Strategic Imperatives: From Quantity to Value
Indiaās future in global dairy exports lies not in bulk commodities, but in value-added, specialised, and culturally distinct products. Hereās how we get there:
š§¬ A. Upgrade Processing Capabilities
Invest in technology to produce:
- Low & High Heat SMP
- Anhydrous Milk Fat (AMF)
- Lactose-free and fortified products
- Heat-stable dairy protein concentrates
- UHT and ambient dairy drinks
š¦ B. Expand B2C Offerings
Indiaās proximity to Asia, the Gulf, and Africa gives it a significant advantage. Export potential exists in:
- UHT and flavoured milk
- Shelf-stable cream and dahi
- Ready-to-drink lassi
- Ice cream mixes and cheese spreads
š§ C. Leverage Buffalo Milk Advantage
India is the largest buffalo milk producer, giving itaĀ unique positioning in:
- Mozzarella (for pizza chains)
- White cheese (for West Asian markets)
- High-fat dairy bases for frozen desserts
š¬ D. Innovate in Ethnic & Fusion Foods
Indiaās sweetmeats and dairy-rich desserts are in high demand globally. Shelf-stable, culturally adaptive versions of rasgulla, peda, and kheer could create a new category in international ethnic food aisles.
š Who Should We Be Targeting?
India must move beyond traditional buyers and explore:
- East Aisa (once regulatory barriers ease)
- Africa (price-sensitive, high SMP/AMF demand)
- Russia and CIS countries
- Southeast Asia (ready for UHT and consumer dairy)
- Latin America (dairy-deficient zones like Mexico, Brazil)
And yes, India needs to set up an āIndian Dairy Export Exchangeāāa transparent pricing and auction system to serve global B2B buyers, inspired by New Zealandās GDT.
š Conclusion: Lead or Lag?
India is poised to be the largest dairy economy in history. But scale is not strategy. If we donāt align our surplus with global demand, it will become a source of distressāfor farmers, processors, and policymakers alike.
Dairy export success demands:
- Visionary policy alignment
- Strategic investment in technology
- Market intelligence and product innovation
- Stronger public-private coordination
- Diplomatic and regulatory groundwork
The window of opportunity is openābut not forever. If India acts decisively now, it can shift from being the worldās dairy workhorse to a globally respected dairy powerhouse.
Letās not miss the moment.