India’s dairy sector stands at a pivotal moment. With trade pressure rising and global markets beckoning, we must balance protection today with preparedness for tomorrow.
India’s Dairy Sector: Strong Foundations, Smarter Future
By Rajiv Mitra
Earlier this month, I had the pleasure of joining Govindraj Ethiraj on his podcast, The Core Report. Govindraj is a seasoned journalist and media entrepreneur, known for his clarity, balance, and commitment to economic journalism that serves the public interest. Our conversation touched on a wide range of themes – from trade protection and domestic investment to farmer empowerment and the silent rise of India’s private dairy giants.
Trade Talks and Why Protection Still Makes Sense
India has consistently protected its dairy sector in free trade agreements (FTAs) with major partners, including the UK and the US. The Reuters article from May 26, 2025 (https://www.reuters.com/world/india/indias-dairy-sector-pushes-safeguards-us-trade-talks-2025-05-26/) outlined how dairy remains a sticking point. The reasons are both economic and cultural.
First, around 80 million households in India – largely smallholder farmers – depend on dairy. Most of them own just one or two cows. The economic shock of unrestricted, subsidized imports could collapse this decentralised livelihood base.
Second, Indian consumers – nearly 30–35% of whom are vegetarian – depend on milk as a primary source of protein. Western cattle feed practices often include animal protein, which creates a fundamental cultural mismatch. Protecting the sector is about sovereignty and sensitivity – not just tariffs.
This approach also echoes India’s 2019 exit from the RCEP trade agreement, where dairy was the key deal-breaker. The lesson: safeguarding dairy is not a temporary tactic, but a strategic national stance rooted in lived realities.
Building for Global Competitiveness
Protection cannot be permanent. This is a time-bound opportunity to prepare. What should we be doing?
- Increase investment in cold chains and logistics
- Develop stronger traceability systems
- Promote clean-label, certified dairy brands
- Strengthen regulatory frameworks
India must move from being a volume leader to a value leader. That means dominating not just in litres of milk produced, but in trusted, exportable products like cheese, yogurt, ghee, paneer, and functional dairy foods.
To do so, both policy and private enterprise must align around quality, food safety, and certification. The goal is not just to feed India, but to earn consumer trust globally.
A 50–50 Dairy Economy: Coops and Corporates
Today, 50% of India’s milk is handled by private players. Thirty years ago, cooperatives handled 90% of the volume. This shift is significant.
Cooperatives provide deep rural reach, embedded trust, and a grassroots ethos. Private companies have introduced capital, tech-based efficiency, and consumer-focused innovation. Together, they have built the world’s largest decentralized dairy supply chain.
The outcome: greater resilience, wider product range, and a sector ready for its next leap – provided the two sectors continue to collaborate and not compete destructively.
Trust Is Layered: Brand, Maker, Seller
We spoke about how trust in dairy products is built in layers. Consumers place faith in national brands like Nestlé or Britannia. But behind these brands lie manufacturers like Schreiber Foods, Govind Milk, or Sonai Dairy. And beyond the manufacturer lies the final link – the seller, whether it’s a kirana store, modern trade retailer like DMart or Reliance, or e-commerce platforms like BigBasket or Amazon.
Each link must earn trust on its own. Consumers are becoming more informed and more curious. They no longer just buy a brand – they want to know who made it, where it was made, how the milk was collected, and who sold it to them.
Local by Nature – Even for Global Players
Dairy is inherently local. Even multinationals like Lactalis, where I previously served as CEO, operate through regionally embedded models. The consumer base is fragmented, as are taste preferences, procurement structures, and processing formats.
A national or global strategy only succeeds when executed with micro-market precision. This is why even pan-India brands adopt local flavours – literally. Buttermilk in Tamil Nadu is not the same as in Punjab. This hyperlocal logic applies to dairy across the board.
Sustainability and Traceability Are Non-Negotiable
Indian consumers are evolving. They want to know:
- How was the milk sourced?
- Was the cow healthy and ethically treated?
- Were antibiotics misused?
- Was the environment considered in the process?
Answering these questions requires robust traceability systems. Blockchain-enabled tags, QR codes, IoT milk collection sensors – all of this is possible and beginning to scale. But change also requires investment in farmer education, supply chain transparency, and greater regulatory alignment.
India must prepare not just for its domestic consumer, but also to meet European Union and other global import standards. That is the future of sustainable exports.
Getting Closer to the Farmer
Empowering farmers is non-negotiable. That means:
- Improving milk collection efficiency – processors must go closer to the farm gate
- Ensuring dairy farmers are financially included – most still face barriers accessing formal credit
- Supporting smallholders to scale up – from one cow to ten cows, or more
- Educating farmers on safe feed practices, animal health, toxin-free milk production
A farmer should not have to carry milk five kilometers every day. The system should come closer, with chilling points, transparent pricing, and timely payments. Greater inclusion in banking and credit will create second-generation dairy entrepreneurs.
Veterinary access, antibiotic discipline, and clean feed systems will help improve quality and trust, both locally and for export.
Value-Added Is the Future
The private sector is increasingly focusing on value-added products. Why?
- Longer shelf life means easier transport and better margins
- Consumer preferences are shifting toward convenience and variety
- Export potential grows with value-added formats like cheese, yogurt, and paneer
The cooperative sector dominates liquid milk. Private players are investing in drying, cheese production, and functional dairy foods. Paneer and yogurt, in particular, are growth categories both in India and overseas.
India has the demand, the milk base, and the entrepreneurial energy. Now it must convert that into products that compete globally.
From Largest Producer to Global Dairy Force
India exports less than 1% of its milk output. That number must rise.
Today’s exports are mostly commodities: skim milk powder, ghee, butter. To rise up the value chain, we need:
- International food safety certifications
- Clean-label product development
- Farmer-level traceability systems
Europe, North America, and even premium markets in Asia are watching. India’s dairy must match their standards to earn shelf space. We cannot do that on volume alone. We must compete on trust, quality, and consistency.
Conclusion
Dairy is not just a business in India. It is an act of nourishment, a source of rural dignity, and a powerful employment engine. Its future lies in balancing self-reliance with global ambition, and tradition with innovation.
I thank The Core Report and Govindraj Ethiraj for facilitating a deep, expansive, and timely conversation.
References and Links
- Reuters article (May 26, 2025): https://www.reuters.com/world/india/indias-dairy-sector-pushes-for-safeguards-in-us-trade-talks-2025-05-26/
- The Core Report podcast episode: https://youtu.be/9INbaArzYi0?si=gFqsBD5dATFjjCyh
- My earlier blog (May 6, 2025): India’s Dairy Sector Needs Protection — But Not Permanently [https://rajivmitra.com/2025/05/06/dairy-protected-today-competitive-tomorrow/]
