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  • Writer's pictureNITARA

Dairy Sector in India: Opportunity for Entrepreneurs

Producing milk has been part of farming for a long time. In the last century, farms have become more specialized. In the 20th century, some farmers started with farms that only produce milk.

Dairy farming is a major source of livelihood in rural areas. Dairy farming is a class of agriculture for the long-term production of milk, which is processed (either on the farm or at a dairy plant, either of which may be called a dairy) for the eventual sale of a dairy product.

Commercial and small-scale dairy farming in India is no doubt playing an important role in the total milk production and economy of our country.

Almost all regions of India are suitable for setting up dairy farming businesses. Dairy cow farming means ‘raising highly milk productive cows commercially for milk production purposes’.

India is one of the fastest-growing economies in the world. As per the recent survey, India is the largest producer of several Agri commodities.

India is also the second-largest consumer market. Indian Government policies and fruitful tie-ups have made significant investments in world-class ports, logistics & supply chain infrastructure.

The ease of doing business facilities in India:

  • Investor friendly incentives

  • Highly skilled manpower pool

  • Proactive Government policies

Department of Animal Husbandry, Dairying & Fisheries (DADF), Ministry of Agriculture, Krishi Bhawan, New Delhi has given administrative approval for implementation of the Central Sector Scheme entitled “Dairy Entrepreneurship Development Scheme” during 2015-16.

The multiple objectives of the scheme involve generating:

  • Self-employment & providing infrastructure for the dairy sector

  • Setting up modern dairy farms & infrastructure for the production of clean milk

  • Encouraging heifer calf rearing for conservation & development of good breeding stock

  • Bringing structural changes in the unorganized dairy sector so that the initial processing of milk can be taken up at the village level.

  • Upgrading traditional technology to handle milk on a commercial scale

  • Providing value addition to milk through processing and production of milk products.

Why India for Dairy Processing?

  • India's milk production was expected to reach 180 million MT by 2020, from the current 146 million MT, while the demand is projected (by NDDB) to reach 200 million MT.

  • The Indian dairy market is amongst the largest and fastest-growing markets in the world.

  • India has managed to attain the top position in milk production globally owing to the huge bovine population. However, the full potential of the Indian milch herd remains unattained.

  • Per capita availability of milk in India has reached 322 grams per day, higher than the world average of 293.7 grams per day. With the production of around 146 million MT, India is the largest producer of milk globally.

  • To tap the surging demand, most dairy players have entered the processed dairy segment with the introduction of value-added products like ghee, flavored yogurt, butter (with variants), flavored milk, cheese, etc.

  • Changing lifestyle patterns, increasing disposable incomes, and increasing health consciousness are the key growth drivers for milk and high-value milk products in India.

Major States

Uttar Pradesh is the highest milk-producing state in India contributing around 18% to the total milk production, followed by Rajasthan, Andhra Pradesh, Gujarat, and Punjab contributing 11%, 10%, 8%, and 7% respectively.

Technology & Equipment Suppliers

  • New technology in value-added dairy products' processing

  • Cold chain

  • Innovation in packaging solution

  • New product development for cattle feed

  • New veterinary care technology & cattle diagnostics services


• India exported dairy products of around USD 0.2 Bn in the year 2014-15.

• The major destinations include Bangladesh, UAE, and other Southeast Asian countries

Key Fiscal Incentives

• 100% FDI permitted through automatic route in the food processing sector.

• Concessional rate of Customs Duty applicable on imported equipment under the project import benefits.

• Income Tax deductions on capital expenditure allowed at the rate of 150% for setting up and operating cold chain or warehouse for storage of agricultural produce.

• 100% income tax exemption available to new food processing, preservation, and packaging units for the first 5 years of operation, and at the rate of 25%-30% thereafter.

• A fund of ` 20 billion created with National Bank for Agriculture and Rural Development (NABARD) for extending affordable credit to designated Food Parks and units therein.

• Loans to food & agro-based processing units and Cold chains covered under Priority Sector Lending (PSL) by banks.

Schemes of Ministry of Food Processing Industries

  • Mega Food Park Scheme by Ministry of Food Processing Industries. The government of India through MOFPI is putting up 42 mega food parks (35 approved).

  • The parks have around 1,200 developed plots (of approximately 1 acre each) with basic infrastructure enabled, that entrepreneurs can lease for the setting up of food processing and ancillary units.

  • Scheme for Cold Chain, Value Addition and Preservation Infrastructure by Ministry of Food Processing Industries. State Specific Incentives Being Offered by the Different States

Source: Industry and NDDB

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