India’s dairy industry must move beyond volume growth
India’s dairy sector has expanded from a position of milk scarcity to becoming the world’s largest milk producer. The growth has increased availability and brought millions of farmers into the formal value chain. The article, published on September 19, 2026, argues that the sector’s next phase should be measured not only by additional milk output but also by the value generated for producers and other participants.
India has about 150m tonnes of marketable milk surplus. Cooperatives and private dairies together collect roughly 55m tonnes, while an estimated 90m-95m tonnes pass through informal or unorganised channels. The article says that parts of this less formal economy generate more value per litre than the organised sector.
The issue has gained importance as milk procurement prices have risen. Dairy companies have reported pressure on margins, and some industry participants are waiting for raw-milk prices to decline. At the same time, farmer incomes have not kept pace with the wider cost environment.
Citing Kuldeep Sharma, chief editor of Dairy News 7x7, the article says nominal dairy-farmer income increased at an annual compound rate of about 11.5% between the 2019 and 2025 financial years. Growth in real income was closer to 5%, below India’s real GDP growth over the same period. The article states that the resulting pressure from input costs and inflation has made producer economics a central concern for the sector.
Heritage Foods has stated that it aims to double the nominal income of its farmer partners over five years. Achieving that target would require annual growth of about 14.5%, compared with the sector’s historical rate of roughly 11.5%. The article links the higher target to the development and sale of products that capture more value.
Dairy consumption in India has grown by an estimated 4%-5% a year over the past five years, supported by urbanisation, higher incomes, greater awareness of nutrition and increased interest in protein-rich diets. Supply has expanded more slowly, at about 3%-3.5% annually. The article says that the continuing gap has contributed to supply-demand imbalances and upward pressure on prices, while climate variability has added uncertainty.
India’s position in international dairy trade illustrates the value challenge. The country imports higher-value products such as whey protein concentrate and milk protein concentrate, while exporting lower-value commodities including skimmed-milk powder. The article says India has already demonstrated its ability to increase scale and must now focus on retaining more value from the milk it produces.
