India, the world’s largest milk producer, has been steadily increasing its dairy exports, positioning itself as a key player in the global dairy market. The country’s diverse dairy portfolio, cost-effective production, and improving quality standards have contributed to growing demand for Indian dairy products in international markets. However, challenges such as export restrictions, trade policies, and quality compliance continue to limit its full potential.
In this blog, we explore India’s key dairy exports, major international markets, and policy support mechanisms that are helping Indian dairy businesses expand their global footprint.
India’s Dairy Exports: Key Products and Global Demand
1. Key Dairy Products Exported from India
India’s dairy export portfolio includes a range of products catering to different global markets. The most exported dairy products include:
- Skimmed Milk Powder (SMP): India is one of the largest exporters of skimmed milk powder, which is widely used in food processing, confectionery, and bakery industries.
- Casein and Casein Derivatives: Used primarily in the pharmaceutical and food processing industries, casein is in high demand globally.
- Butter and Ghee: Indian clarified butter (ghee) has a strong demand in Middle Eastern and South Asian markets, especially due to its cultural and culinary significance.
- Milk Cream and Condensed Milk: These products are widely used in dessert and confectionery manufacturing.
- Cheese and Paneer: While domestic consumption dominates, Indian cheese exports are gradually increasing, particularly to South Asian and Middle Eastern countries.
2. Global Demand for Indian Dairy Products
Indian dairy products enjoy significant demand due to:
- Cost competitiveness: Indian dairy products are priced lower compared to exports from Europe and North America.
- Rising demand for ghee and clarified butter: Many Middle Eastern and South Asian countries prefer Indian ghee for its purity and traditional appeal.
- Quality improvements: The adoption of modern processing techniques and stringent quality control measures has improved India’s dairy export acceptance in global markets.
- Growing demand for casein and whey protein: The rise of the sports nutrition and functional food industry has increased the demand for high-protein dairy derivatives.
Major Export Markets for Indian Dairy Products
1. Bangladesh: India’s Largest Dairy Export Destination
Bangladesh is India’s top importer of dairy products, primarily skimmed milk powder and dairy-based ingredients. Factors driving this demand include:
- Proximity to India, ensuring lower transportation costs.
- Growing demand for milk-based food products.
- Trade agreements allowing smoother dairy imports.
2. United Arab Emirates (UAE): Premium Dairy Market
The Middle Eastern market, especially the UAE, has been an essential destination for Indian dairy exports. The UAE imports butter, ghee, and cheese, primarily due to:
- A large Indian expatriate population preferring Indian dairy brands.
- High demand for premium dairy products in the hospitality and foodservice industry.
- Strong trade relations between India and the UAE.
3. Southeast Asia: Emerging Dairy Hub
Countries like Vietnam, Malaysia, and Indonesia have seen a surge in demand for Indian dairy exports. The reasons include:
- A rapidly expanding food processing sector requiring large amounts of skimmed milk powder.
- Increasing health awareness and demand for high-protein dairy products.
- India’s competitive pricing over European dairy products.
4. Middle East and North Africa (MENA)
The MENA region imports a variety of dairy products like casein, ghee, and butter due to:
- High reliance on imports for dairy consumption.
- Preference for traditional Indian dairy products in Arab cuisines.
- Halal-certified Indian dairy gaining popularity.
5. Expanding Opportunities in Africa
African countries, especially Egypt, Nigeria, and Kenya, are emerging as new markets for Indian dairy exports due to:
- Growing urbanization and dairy consumption patterns.
- Dependence on imports to meet domestic dairy demand.
- India’s trade relationships with African nations facilitating easier access.
Policy Support for Increasing India’s Dairy Exports
The Indian government has been actively working to boost dairy exports by offering policy incentives, infrastructure support, and market development initiatives.
1. Export Incentives and Subsidies
The Indian government has introduced various subsidies and incentives to encourage dairy exports, including:
- Duty Drawback Scheme (DDS): Refunds customs duties paid on imported raw materials used in export production.
- Merchandise Exports from India Scheme (MEIS): Offers financial incentives for exporters to compete in international markets.
- Interest subvention on export credit: Reducing borrowing costs for dairy exporters.
2. Infrastructure and Quality Enhancement Programs
To improve dairy processing and ensure export-quality products, the government has:
- Established the Dairy Processing and Infrastructure Development Fund (DIDF) for modernization of dairy plants.
- Strengthened cold chain logistics and warehousing to maintain product freshness.
- Enforced stringent quality standards for export-ready dairy products.
3. Trade Agreements and Export Facilitation
- India-Bangladesh Free Trade Agreements (FTAs) facilitate smoother dairy trade.
- Ongoing negotiations with European and Middle Eastern countries aim to lower trade barriers.
- Government-backed export promotion councils, such as APEDA (Agricultural and Processed Food Products Export Development Authority), assist dairy exporters in entering new markets.
4. Strengthening India’s Dairy Brand Globally
To build trust in Indian dairy products, government initiatives focus on:
- Halal certification for Middle Eastern and Southeast Asian markets.
- Organic dairy certification for premium global markets.
- Building Indian dairy as a premium brand through global marketing campaigns.
Future of India’s Dairy Exports: What Lies Ahead?
1. Expansion in Premium Dairy Categories
The future of Indian dairy exports will see greater demand for organic dairy, A2 milk, and specialty cheese varieties. As global consumers shift towards premium, health-conscious choices, Indian brands have the potential to expand in high-value dairy markets.
2. Boosting Digital and E-Commerce Dairy Exports
With the rise of cross-border e-commerce, Indian dairy brands are increasingly leveraging online platforms to sell directly to global consumers. Amazon, Flipkart, and Alibaba are becoming key channels for dairy exports.
3. Sustainable Dairy Practices for Export Growth
Many countries are imposing sustainability and environmental compliance norms on dairy imports. To remain competitive, Indian dairy businesses must adopt:
- Eco-friendly packaging.
- Low-carbon dairy processing techniques.
- Animal welfare-focused dairy farming.
4. Strengthening India’s Position in Global Dairy Trade
India’s dairy industry is at a turning point, and with continued investment in processing technology, policy reforms, and global market expansion, the country can emerge as a key global dairy supplier.
Conclusion
India’s dairy sector holds immense potential to expand its footprint in global markets. With growing demand for Indian dairy products, strong government support, and technological advancements in processing and logistics, the future looks promising.
To capitalize on these opportunities, Indian dairy exporters must focus on quality, branding, and sustainable production. By leveraging trade agreements, export incentives, and infrastructure development, India can strengthen its dairy export leadership and unlock new markets worldwide. For dairy entrepreneurs, now is the time to tap into global demand and build export-ready dairy brands that cater to evolving consumer preferences.
