How close is India to becoming a key dairy exporter?

Published 14 August 19

India is the world largest milk-producing nation, with dairy export volumes this year (January-April) double the same period last year. However, overall exports volumes remain small, at 45,000 tonnes. For comparison, the UK exported 518,000 tonnes during the same period.

With Indian milk production expected to increase by another 4% next year, how close is India to becoming a key dairy exporter?

Exports are on the rise

India exported 94,000 tonnes of dairy products last year, valued at nearly $290 million. Butter and other dairy fats (including ghee) make up the majority of exports, accounting for 65% in volume terms. Exports of milk powders were particularly high last year, as government intervention during a milk glut led to large national stockpiles of skimmed milk powder.

An increase in exports of butter (including ghee) and skimmed milk powder has driven the majority of the growth so far in 2019. Bangladesh, Egypt and the United Arab Emirates are the main export destinations.

While Indian dairy exports have increased substantially, Indian exports are still relatively small on a global scale.

However, India has a geographical advantage to reach the key Asian import countries. With dairy consumption expected to grow in many of the nations, India will be in a good position geographically to benefit, if it is able to produce the goods.

So how close is India to becoming active on global markets?

The United Nations expect the population of India to reach 1.49 billion by 2028, 9% more than the estimate for 2019. Consumption per capita is also expected to grow. Therefore is it likely that much of the forecast growth in the Indian dairy production over the next decade will be geared towards meeting its growing domestic demand.

The fragmentation of the industry means maintaining the chill chain from the large number of small farms through to a large-scale processor is a challenge. However, further expansion of bigger farms aligned to large scale processors will bring further opportunities for India to compete on the global market. While it may be a few years before India is a major global player, the size of the industry means it is one for the other key exporting nations to keep an eye on.