India Ratings and Research (Ind-Ra) has projected India’s milk production to grow 5% annually in the near to medium term, with domestic demand acting as the key driver.
The agency estimated that output in FY25 rose 5% year-on-year, extending India’s lead as the world’s largest milk producer.
In FY24, India’s milk output increased 3.78% to 239.3 million tonnes, according to Ind-Ra. The growth was supported by favourable government policies and the dairy sector’s role as a crucial supplementary income source for millions of rural households, particularly women and marginal farmers.
Small and marginal producers remain the backbone of India’s dairy industry, which accounted for 19.8% of total agricultural output in FY24.
The sector not only provides nutritional security but also plays a vital role in strengthening rural economic development.
“India’s dairy industry has seen remarkable growth, reinforcing its status as the world’s leading milk producer,” said Anuradha Basumatari, Director at Ind-Ra.
Per capita milk availability in India rose from 406 grams per day in FY20 to 471 grams per day in FY24, with Ind-Ra expecting availability to grow by 4% in the near to medium term.
The rise is driven by a modest population growth of 1%, rapid urbanisation, and higher disposable incomes.
Currently, organised and unorganised channels market nearly 63% of India’s milk output, with the organised sector, including cooperatives and private companies, ensuring year-round procurement and stable farmer incomes.
Household Demand to Sustain Growth
Household consumption will remain the primary growth driver, according to Ind-Ra.
Manufactured dairy products will grow at a CAGR of 10.8% to ₹4,200.6 billion by FY27, up from ₹3,090.8 billion in FY24. Between FY20 and FY24, the sector expanded at a CAGR of 9.1%.
Dairy consistently accounted for 20.7–22% of household food expenditure between FY12 and FY24, making it the second-largest food category after cereals, breads, and pulses.
Cooperatives will remain central to milk procurement and will handle 24 million tonnes of the 51 million tonnes managed by the organised sector in FY24.
Marketable surplus milk reached 160 million tonnes, with 32% handled by organised players.
The cooperative model ensures that 80–82% of the milk price goes directly to farmers, with prompt payments providing them a shorter operating cycle than crop farmers.
India is also emerging as a significant exporter of dairy products. In FY25, exports rose 77.9% in volume and 80.6% in value, totalling 113,350 metric tonnes worth USD 492.9 million.
Although milk powder exports fell, fermented milk, butter, and clarified butter drove growth. Key destinations included the UAE, Bangladesh, the USA, Saudi Arabia, and Bhutan.
Leading exporters such as the Gujarat Cooperative Milk Marketing Federation, Mother Dairy, and Britannia strengthened India’s global presence.
Government initiatives continue to encourage dairy exports, but Ind-Ra emphasised that domestic consumption will remain the cornerstone of India’s dairy growth in the years ahead.
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