As the world’s leading milk-producing nation, India has reached an annual production of 240 billion litres (240 million tonnes), accounting for over 24% of global output. What a phenomenal transformation it has been—from a milk-deficit country 50 years ago to one that is now self-sufficient and looking to become a global supplier!
We often lament that milk production growth last year was only 3.8%, a drop from the earlier average of 6%. But let’s not forget: global milk production is growing at just about 1% annually. Coupled with challenges faced by developed nations—such as high nitrogen levels in soil and greenhouse gas emissions like methane—one must ask: where will surplus milk come from in the future? India arguably offers the most promising answer, with its vast cattle wealth (over 300 million), dairying as a major economic activity, and multiple government initiatives focused on improving the sector. An estimated 80 million people are engaged in milk production, with women comprising more than 75% of this workforce!
Let’s take a closer look at where we stand globally in milk production:
As seen in the table, India—with 240 billion litres today—is on track to match the combined milk production of the five major dairy-exporting countries/regions in just 3–5 years. Imagine that!
Looking ahead, India is projected to contribute 30% (300 million tonnes) of global milk production by 2030, and possibly 45% by 2047. With our per capita domestic milk consumption now at 470 grams/day (compared to the world average of 322 grams/day), one might ask: how much more can we consume? When compared to developed nations, where the average is around 750 grams/day, there's still headroom for growth. But in 3–5 years, India is likely to reach a surplus—if not sooner.
Preparing for Surplus: The Need for Strategic Action
In anticipation of this surplus, it's imperative that we begin preparing now. The global dairy trade stood at $107 billion in 2023, and India’s entry into this space is not just logical—it’s necessary.
Current Scenario & Constraints
In a typical year, India produces approximately 600,000 tonnes of skim milk powder (SMP). Of this, around 350,000 tonnes are used during the lean season for recombination, and another 150,000 tonnes are absorbed into food applications, leaving about 100,000 tonnes as rolling stock. However, over the past 2–3 years—due to attractive milk prices, herd growth, better feed, and a shorter lean season—we found ourselves with surplus stocks exceeding 300,000 tonnes of SMP. This excess caused SMP prices to remain depressed for months.
With domestic consumption unlikely to shift dramatically overnight, exports appeared to be the only solution. Yet Indian SMP prices were not internationally competitive, and global demand remained weak—particularly from China. So, what’s the way forward? We need to diversify beyond basic Medium Heat SMP and develop specialized variants such as Low Heat SMP (used in cheese production) and High Heat SMP (used in evaporated milk). But consistent production of these variants requires not only high-quality raw milk but also advanced equipment and technology. This means investing in technical capacity, R&D, and adopting a more innovation-led mindset.
To compete globally, India must focus on the Three C’s: Consistency in Quality: Consistency in Supply: and Consistency in Price Competitiveness.
A bright spot amidst recent challenges was the strong performance in butter and milk fat exports—55,000 tonnes in calendar year 2024—helping dairy processors manage excess stock, improve cash flow, and earn foreign exchange. One can only imagine how difficult the situation would have been without this opportunity.
Where Do We Stand on Dairy Exports? Currently, India’s exports of SMP and butter are largely opportunistic in nature. While we’ve maintained trade with the Middle East, Southeast Asia, and neighboring countries, players like Amul have led the way in taking Indian dairy to global markets, with a presence now in the USA and plans for the EU. KMF has also launched Nandini Dairy Parlours in Dubai. Perhaps it’s time to learn from these pioneers and scale up.
We should also draw inspiration from established dairy-exporting nations like New Zealand, the USA, and the EU. Additionally, countries like Malaysia, which aren’t traditionally milk producers but excel in exports (e.g., condensed milk), offer valuable lessons. We don’t need to copy their models, but we can certainly learn from their experience and create our own unique USP.
Exploring New Markets
We need to expand our market reach to include key importers such as Russia, China, Africa, and Mexico. While some of these markets are already open, others require regulatory clearances—an area where government intervention would be invaluable.
Looking further ahead, once we establish a reputation for reliable, standardized, and competitive supplies, why not envision an “Indian Dairy Products Auction Platform” for global exports? Why not, indeed?
Opportunities: What to Target?
As mentioned earlier, moving beyond bulk SMP to value-added and specialized dairy products is crucial. Here are some avenues:
B2C Consumer Products: India’s proximity to markets makes UHT milk, flavored milk, fresh cream, and ice cream mixes attractive export options.
Buffalo Milk Advantage: As the world’s largest producer of buffalo milk—with expected herd growth—we have a distinct edge in white dairy products like mozzarella and white cheese spreads.
Anhydrous Milk Fat (AMF): Ideal for recombination in Middle East and Southeast Asian markets.
Ethnic Sweets with Shelf Life: Indian sweets are increasingly popular among the diaspora. Tweaking recipes to suit global palates could unlock new demand.
Tailored Products: Milk powder with vegetable fat, though not in high domestic demand, is well-accepted in Africa, Iraq, the Middle East, and Southeast Asia.
In a nutshell, exports are the only sustainable long-term solution for India’s dairy sector. While we’ve achieved self-sufficiency, becoming a global leader will require further vision, investment, and effort. Let’s seize this opportunity—while we still have the advantage.
(Author is an independent food consultant with expertise & specialization in dairy exports and projects.)