Overview

India maintains its position as the world’s largest milk producer, with an estimated 239 million metric tons (MMT) of milk production in 2025, accounting for about 24–25% of global output (total global milk production is around 993 MMT).

The dairy sector contributes approximately 4–5% to India’s GDP and nearly 25% to India's agricultural GDP, supporting the livelihoods of over 80 million rural households, primarily small and marginal farmers.

The Indian dairy market is valued at INR 18,975 billion (about USD 250 billion) as in 2024 and is projected to grow at a Compound Annual Growth Rate (CAGR) of 12.35% from 2025 to 2033, potentially reaching INR 57,002 billion by 2033, reflecting robust sectoral growth driven mainly by rising domestic demand and technological upgradation at all levels.

Per capita milk availability: approximately 471 grams per day in India, significantly higher than the global average of 322 grams.

Major milk-producing states: Uttar Pradesh (16.2%), Rajasthan (14.5%), Madhya Pradesh (8.9%), Gujarat (7.6%), Maharashtra (6.7%).

Livestock population: Around 536.8 million animals, including 303.8 million in-milk and not-in-milk bovines.

Consumption and processing: Fluid milk consumption forecast at 91 MMT for 2025; factory use expected to reach 125.5 MMT.

Cooperative network: 22 federations, 240 district unions, and ~18 million farmer members. Dairying is largely a family-based small business, coupled with the cooperative sector for processing, marketing, and exporting. Dairy farming remains a critical source of income and self-employment, particularly benefiting rural women. Cooperative Models like Amul demonstrate the power of collective bargaining, fair pricing and supply chain integration.

The cooperative sector has its distinct advantages, but it also has disadvantages due to the long-standing monopoly and protection it has enjoyed for decades. Politicisation, bureacratisation, and technocratisation of the system occur inadvertently, making it vulnerable to certain interests and converting it into a roadblock in the empowerment of dairy farmers—the bottom level of the system.

Regulation, accountability and competition can help improve the situation in the dairy sector and overcome the structural challenges.

How to make Indian Dairying more competitive? How to turn challenges into opportunities?

The least disruptive way to make Indian Dairying most competitive is to reduce the input costs of dairy livestock management, together with a squeeze on the processing, marketing and related management costs. These are low-hanging fruits.

Livestock Management:

Though it is known that per animal milk productivity is less in India, it is true that India, as part of its culture, doesn't abandon or slaughter dairy animals once they give less or no milk, specifically cows. Dairy animals are treated as family members. Genetically or constitutionally, our dairy animals are of compact-built, less in weight. Over millennia, they are purposed for milk, not for meat. Apropos, per animal feed-fodder is considerably less in India as Indian breeds consume far less feed fodder by default.

Per Animal Productivity is an important factor, but probably it isn't as important as it is projected in the context of competitiveness of Indian Dairying in view of above mentioned reasons. Feed-fodder conversion efficiency in a breed is more important. Comprehensive studies may help quantify and validate this further.

At least it is very clear that retail prices of fresh milk variants in Indian markets are definitely and consistently lower than their comparables in the USA or UK markets. True that global commodity markets (e.g. skimmed milk powder markets) are not in our favour - our prices being higher - this probably is due to other factors.

Nevertheless, there is definite potential for improving livestock management for better productivity in family-based dairy farms, largely driven by the cooperative sector that has overshadowing backwards linkages over these farms, to make Indian dairying more scientific and more competitive.

Livestock is the mainstay of the dairy sector. Its management is the key to unlocking the potential of the sector. Breed and breeding are the mainstay of livestock management; the other aspects being nutrition, sanitation, hygiene, prevention of disease through vaccination and training, as well as ongoing education of breeders and dairy farmers.

Breed and Breeding: National Breeding Policy

India’s National Breeding Policy rightly emphasises sustainable genetic improvement, focusing on:

Conservation and improvement through pure breeding of indigenous breeds such as Gir, Sahiwal, Red Sindhi, Tharparkar, Kankrej, Ongole and Vechur as well as all breeds of Indian buffaloes;  which are perfectly adaptable to local climates, disease resistant, culturally important and fairly productive if we take into account the overall input costs, mortality morbidity costs and composition of their milk in terms of milk solids - fats and proteins and demands of the consumers even in rural and semi-urban areas. (Farmers themselves mostly consume indigenous breeds’ milk in their homes, though they keep crossbreds and sell their milk to dairy cooperatives for others to consume).

Upgrading nondescript/local cattle through selective breeding with elite indigenous breeds rather than widespread random crossbreeding.

Only selective crossbreeding of nondescript animals using exotic breeds like Holstein Friesian and Jersey to improve milk productivity.

Artificial Insemination (AI) programs use certified semen to propagate superior genetics with mandatory evaluation and quality standards.

Systematic breeding programs and new technology may further help speed up breed improvement.

Natural breeding is still prevalent in certain setups and has a scope for improvement, as dairy farming in India is decentralised in essence. Scientifically managed farms of high genetic merit bulls may be integrated with well-knit village dairy cooperatives or “Gauseva” organisations where natural breeding is preferred or prevalent.

Implementation of Breeding Policy

The Gujarat Government has enacted the Gujarat Bovine Breeding (Regulation) Act, 2025, which aligns with the National Breeding Policy goals to regulate and improve bovine breeding activities.

The legislation seeks to enhance milk production capacity, improve animal health and breed quality and bring standardisation and scientific rigour to breeding practices in Gujarat, a prominent dairy state.

Objective: To improve the quality of bovines (cattle and buffalo) by regulating breeding activities such as the use of breeding bulls, production, processing, storage, sale and distribution of bovine semen; artificial insemination and assisted reproductive technologies.

Establishment of Gujarat Bovine Breeding Regulatory Authority (GBBRA): A statutory body with statewide jurisdiction to oversee and regulate all bovine breeding activities. Powers include registration, inspection, investigation, issuing orders and enforcing compliance. Authority to set conditions for registration and regulation of individuals and entities involved in breeding, semen banks, AI service providers, embryo transfer labs, etc.

Registration: Mandatory registration for anyone engaged in bovine breeding activities, including production, use, sale and transportation of semen, embryos, oocytes and related reproductive materials. Existing practitioners and institutions are given 6 months from the commencement of the Act to register.

Definitions and Scope: Covers cows, bulls, heifers, buffalo and related categories. Defines artificial insemination and assisted reproductive technologies like in-vitro fertilisation, embryo freezing and cloning.

Quality and Disease Control: Emphasis on the use of disease-free bovine semen in artificial insemination to safeguard animal health. Aims to prevent indiscriminate or low-quality breeding practices, including the use of inferior or diseased bulls and semen.

Offences and Penalties: Penalties for violations include fines (up to ₹1 lakh), imprisonment up to 6 months, or both. Provisions for inspections, searches, seizure of unregistered or substandard materials and court interventions.

Additional Provisions: The authority can appoint experts, form committees, maintain accounts and prepare annual reports. Regulates transportation and prevents the import of low-quality semen from other states to Gujarat.

This Act is the most comprehensive sub-national regulatory framework for bovine breeding in India, aligning closely with national policies on breeding and livestock development.

Similar extensive legislation may be enacted by other states. Other states have implemented policies or schemes aligned with the National Breeding Policy and Rashtriya Gokul Mission, mainly focusing on conservation, artificial insemination programs and breed improvement.

Tamil Nadu introduced the Tamil Nadu Bovine Breeding Act, 2019, which mandates the registration of bulls used for natural mating and places restrictions on breeding practices. This act has generated debate on the impacts on traditional breeding and indigenous breeds.

At the central level, progressive guidelines and schemes encourage state governments to adopt more regulated, transparent and science-based methods of bovine breeding, but creating a statutory regulatory authority remains understandably largely a state subject. Breeding policy needs to be implemented as rigorously and religiously as possible.

This approach balances increased productivity with conservation of the purity of native breeds valued for their resilience and suited to Indian farming conditions. Subsidies for indigenous breeds and breeding may be of immense relevance in policy compliance and adherence.

Similar legislation needs to be enacted for rampant trading of nondescript or illegally crossbred diseased animals/breeds brought from distant areas without any documentation, and to preserve and promote the trade of documented animals of indigenous breeds as per the tracts of the breeds. Gujarat can take the lead in this, too.

 

The breeding efforts are integrated with nutrition, health, welfare and agro-climatic adaptation under coordinated state and national programs (e.g. National Programme for Bovine Breeding and Dairy Development, Rashtriya Gokul Mission).

Nutrition and Feeding of Dairy Animals

New Zealand is famous for its pastures, grazing cows and their milk. India has Gauchar (Cow Grazing) Lands in almost all villages, but these pastures are not managed properly. Result - most of the dairy animals are stall-fed. Gujarat again can take the lead for the development of “Gauchar” in partnership with Amul cooperatives and reputed Gauseva organisations.

Cost-effective, nutritious feeds in proper form ought to be provided to dairy animals along with fodder, minerals, vitamins and water. Pellet making is now discouraged the world over, but the Indian cattle feed sector is yet to adopt loose feed production. Dairy farmers are yet to be adequately informed about the benefits of loose feed and mixed ration feeding.

Nor is there any legislation or government regulatory authority taking care of the sector. Gujarat can take the lead here, too, by enacting cattle feed regulatory legislation.

The current scenario on cost-effective, nutritious feeds for dairy animals in India is as follows:

1. Feed Composition and Nutritional Components: Dairy cattle feeds in India are designed to supply essential nutrients such as protein, energy, minerals and vitamins, alongside fodder and water.

Common feed ingredients include cereals like maize, bajra, sorghum, oats, barley, wheat, and oilseed meals such as groundnut oilcake, soybean meal, sunflower oilcake, cottonseed meal and mustard cake.

A proper balance of these ingredients is vital for animal growth, health and milk production. Proper procurement based on proper formulation, giving priority to locally produced raw materials for feeds, can help lower the costs significantly. The cooperatives are facing stiff competition from other feed manufacturers as farmers get exposed to largely unregulated feed markets. Promotion of crops that give byproducts for feed and fodder can help ease the costs and supplies for feeding.

2. Pellet Feed vs. Loose Feed: Globally and in many advanced dairy sectors, pelletized feed is increasingly discouraged because it may reduce palatability, affect rumen health or lead to nutrient imbalance if not formulated precisely. Instead, loose feed production is preferred as it allows customised ration mixing, better digestion and flexibility in ingredient inclusion.

However, the Indian dairy cattle feed sector has been slower to adopt loose feed systems, with pellet feed still widely used due to centralised installed plants with huge capacities for pelletisation, with added factors like ease of transport and storage of pellets and probably less chances of adulteration once pellets are made. However, adulteration (driven by corruption) is possible and is probably rampant before pelletisation, and it may be difficult to detect adulteration at the level of farmers and animals post pellet formation.

The system needs overhauling with decentralised mixed ration plants to make feeding cost-effective and nutritious, but there is inertia among the stakeholders.

Dairy farmers in India are yet to be sufficiently informed or trained on the benefits of loose feed adoption — this limits awareness of how loose feed, as part of mixed rations, can improve milk yield, animal health and input costs.

3. Farmer Awareness and Extension Services: Extension programs to educate farmers on customised feed preparation and management, the importance of balanced nutrition, including minerals and vitamins and the shift towards customised loose feeding systems are currently inadequate. Many farmers continue to depend on feed forms or commercial pellet feeds without understanding the potential nutritional gains from formulating customised loose balanced rations. Enhanced training, demonstration and technical support are needed to raise awareness of loose mixed feed.

4. Innovations in Feed Supplementation: Natural local supplements can be cost-effective as well as nutritious as feed alternatives.

5. Policy and Industry Perspective: Government and industry bodies are encouraging better feed quality standards and feeding practices aligned with improving productivity and animal health.

However, a gap remains in modernising feeding systems nationwide, partly due to entrenched feed production infrastructure and inertia.

To popularise loose feed and total mixed ration (TMR), farmer-level and village-level TMR plants can be designed and made available at affordable prices through aided schemes financed by cooperatives and governments.