India, the world’s largest milk producer, struggles to significantly expand its dairy exports despite retaliatory tariffs against U.S. dairy. Structural challenges in quality, infrastructure, and logistics hinder India’s global ambitions in the dairy industry.
India, with a remarkable annual milk production of 240 million tonnes, remains the world’s largest producer of milk. However, despite its dominance in production, India’s contribution to global dairy exports remains minimal at less than 0.5%, in stark contrast to the United States, which controls 6.7% of the global dairy export market.
A key opportunity for India to expand its market share arose with the imposition of retaliatory tariffs on U.S. dairy products. However, India faces several roadblocks that limit its ability to capitalize on this potential. While India’s dairy exports predominantly consist of butter and milk fats, products like fresh cheese and curd represent a small fraction – less than 6% of the country’s exports. In comparison, the U.S. exports 52% of its dairy in these higher-value forms, giving it a competitive edge in global markets.
The primary challenge for India lies in the structural limitations within its dairy sector. India’s largest dairy export markets – Bangladesh, Bhutan, Nepal, the UAE, Saudi Arabia, and Bahrain – are primarily driven by proximity and cultural preferences. This geographical advantage has helped India secure these markets, but it has yet to break into more competitive global dairy markets.
Additionally, India’s dairy industry faces high production and processing costs, which are compounded by weak logistical infrastructure. The country also struggles to meet stringent international quality standards, such as the European Union’s Residue Monitoring Plan, which tests for harmful residues in dairy products. These limitations make it difficult for India to tap into broader international markets.
To truly compete on the global stage, India must invest in improving the quality of its milk, enhance its processing infrastructure, and strengthen cold chain logistics. Furthermore, research and development efforts targeted at export-oriented dairy products are essential to overcome these roadblocks and unlock the full potential of India’s dairy industry on the global stage.
About India’s Dairy Industry:
India’s dairy sector is the largest in the world, producing more milk than any other nation. The sector supports millions of rural livelihoods and is a cornerstone of the Indian agricultural economy. However, challenges in processing, quality, and infrastructure have limited its growth in global markets.
