• The Indian dairy industry is contributing significantly to the country's economy, besides improving the health standards by increasing the nutrition value of the food.
  • The value of output from dairy sector increased to Rs. 5,00,510 million in 1994-95 from Rs. 2,75,080 million in 1990 and is expected to reach the level of Rs. 8,50,000 million by the year 2000 A.D.
  • India occupies first position in the world having a total bovine population of 288 million compared to the world's total bovine population of 1420 million.
  • As per 1992 livestock census, the country has about 62.90 million breedable cows and 42.46 million breedable buffaloes.
  • The cross bred cattle are predominant in Kerala, Maharashtra, Tamil Nadu, Punjab and Uttar Pradesh, while buffaloes are very common in Uttar Pradesh, Andhra Pradesh, Rajasthan, Madhya Pradesh, Maharashtra, Gujarat, Punjab, Bihar, Karnataka, Haryana and Tamil Nadu.
  • There has been a major improvement in milk production which increased from 17 million tones in 1951 to 70.1 million tones in 1997 and the growth was maximum between 1980 and 1990.
  • Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Maharastra, Gujarat, Andhra Pradesh, Haryana, Tamil Nadu and Bihar contributed to the extent of 85 percent of the total milk production in the country.
  • Today, India is the second largest producer of milk in the world after the United States of America. The present per capita availability of milk is 205 gms as against the ICMR recommendation of 250 gms.
  • The statewise milk production during 1992-93 and targets for 1996-97 alongwith the per capita availability of milk are given in Annexure I.
  • In 1970 under the aegis of NDDB, "Operation Flood" programme was launched to modernize the dairy sector and flood the four metro cities with from dairy cooperatives.
  • By the end of 1996-97, 74, 383 village milk producers cooperatives were organised in 264 districts with an average rural milk procurement of 12.26 million litres per day.
  • Another step was taken in 1989, to augment rural income by launching Technological Mission on Dairy Development (TMDD), which aims at applying modern technology to improve productivity, reduce costs of operation and thus ensure greater availability of milk and dairy products.

Milk procurement and processing

  • The organized dairy sector (both co-operative and private) is presently handling only 10-12 percent of total milk production in the country.
  • The targets and achievements of milk production, procurement and processing in co-operative sector by the end of VIII Five Year Plan are given in Annexure II.
  • Thus it indicates, there is a wide scope for processing of milk and manufacture of milk products for domestic consumption as well as export.

Export performence

  • Dairy products form one of the fastest growing segments in the livestock produce export.
  • The major products exported are malted milk foods, ghee and cheese (to some extent) to the countries like Bangladesh, UAE, Nepal, Sri Lanka, Bahrain and Oman.

Export potential and marketing

  • Bangladesh, United Arab Emirates, Nepal, Sri Lanka and Oman are the potential countries for export of malted milk products, butter and ghee.
  • The export of milk and milk products to currently existing markets would increase to Rs. 285 million and to new markets to Rs. 155 million. Thus exports are likely to touch Rs.440 million by the turn of the century.
  • The GATT agreement further gave a boost to the dairy industry, as India has a comparative cost advantage in regard to milk production.
  • NABARD has been actively involved in credit disbursement in a number of schemes in dairy sector.
  • It also encourages development of new products through its Research and Development Fund besides guiding various entrepreneurs in new areas of business and technology.



  • Dairy industry has come to play an important role in rural development. By organising milk production along scientific lines and processing and marketing of milk products or business lines, lot of incentive is being given to the rural produces to produce more milk and be benefited.
  • It also helps the urban consumer to get milk and milk products in good clean condition neatly packed and at competitive price.
    In olden days dairying was considered to be subsidairy occupation to agriculture.
  • But the recent trend is that the people consider dairying as a primary / major occupation because of regular income all through the year. Research workers say that a good, healthy dairy cow in equal to one acre of land.

Principles to be followed to maintain a profitable dairy enterprise:

  • Selection of highly graded exotic animals
  • Proper detection of heat
  • Insemination should be done by a right person at proper time and at the right place
  • Prompt diagnosis of pregnancy should be carried out by an experienced man
  • Proper care and management of pregnant animals
  • Scientific rearing of cows should be adopted
  • Ensure whether the heifers are regularly coming to heat or not
  • Good quality fodder should be fed to the animals
  • Feeding of lactating cows should be done according to its milk yield
  • Wastage of feed should be avoided
  • Ensure regular calvings in the farm i.e. "calf a year" in obtained
  • Proper diagnosis and control of diseases


Indian dairy industry

  • India is recognized as a biggest and fastest growing markets in the world for milk and milk products.
  • So all the countries are looking at Indian dairy industry markets for exports. As per the WTO norms, the milk produced in India is yet to get the certificate for high quality.
  • As per GATT agreement the export subsidy is reduced. Because of this we are expecting major changes in dairy industry of North America, Europe and Australia.
  • India may also get some advantage in this situation. After reduction in subsidies given by other countries India would be able to compete with their products efficiently on price in international markets.
  • At present India has negligible exports to international markets. These are at present are dominated by European union, Newzeland, Australia and America.
  • These countries constitute 85% of the world export. Newzeland, Australia export 80.98% and 50% of there dairy products respectively.
  • During 1999-2000 7.8 crore tones of milk was produced by India followed by 7.1 crore tones by U.S.A. and 3.9 crore tones, by Russia.
  • In India 46% of the milk produced is consumed as whole milk, 28% as ghee, 7% as butter, 8% as curd, 7% as Koa and 4% as milk powder / ice-creams. In 1950 our country produced 1.7 crore tones of milk which increased by 5.5% every year till 1998 to reach 7.8 crore tones because of "operation flood programme". In 1999 it reached 8.19 crores while in 2000 it is expected to reach 8.6 crores.
  • Because of this improvement in milk production the per capita availability of milk in 1970 is 112 gms while 1998-99 it increased to 211 gms.
  • Both public and private sector have contributed to the dairy industry growth in India. Government dairy distributes 90% of its milk in sachets or in containers while remaining 10%is marketed as butter, ghee etc.
  • on contrary, private sector only markets 20% of milk and remaining 80% of milk is made into preparations suitable for exports.
  • Some exporters were not successful in dairy business as they did not maintain quality and hygiene.
  • We have to develop export markets for milk products. For this we need scientifically process the milk to prepare ice-creams, flavoured, milk of high quality. Excess milk has to be converted to Lactose, Kanian etc., which can be exported to developing countries.
  • Though India is No. 1 in milk production it is unfortunate that we are importing milk products from other countries.
  • During last financial year we exported 40 crore worth of milk products and imported Rs. 97 crore worth products.
  • By increasing tax from 0-60% on imports we could reduce imports this year but as per GATT agreement we have to reduce this tax to 15% on imports. Since we do not have good technology for production of skim milk powder we are forced to import them from Europe and Newzeland.
  • We should encourage Indian entrepreneurs to export dairy products instead of allowing MNCs. We need to create brand name for Indian dairy companies.
  • By creating new markets in Asia we can create demand for extra 30 lakh tones dairy products. Because of "GATT" the exports of European Union are reducing. Australia and Newzeland together are producing 1.2 crore tones per annum. They are not able to increase their production further.
  • Today Russia is importing large quantities of milk products due to 25% reduction in milk production. India has very good relationships with Russia so this should help us to increase our exports to Russia. So our country should produce best quality milk and try to export to countries like Asia, Africa etc.

Milk production in India
Milk production (Million tonnes)

50 years livestock development

  • Establishment of Civil Veterinary Department
  • Establishment of Serum Institute (VBRI)
  • C.V.D. renamed as Animal Husbandry Department
  • Supply of Breeding Bulls under premium bull scheme
  • Introduction of Key Village Scheme & Artificial Insemination
  • Introduction of Cross breeding Programme
  • Establishment of Semen Banks
  • Introduction of Intensive cattle Development Blocks
  • Launching of Operation Flood I - Biggest Dairy Development project
  • Starting of Intensive Sheep development projects
  • Functioning of Indo Swiss Project
  • Reorganisation of the Animal Husbandry Department
  • IIntroduction of Livestock Projection Programmes for Weaker Sections
  • Formation of A.P. Meat and Poultry Development Corporation
  • Operation Flood II
  • Formation A.P. Dairy Development Co-operative Federation
  • Introduction of Frozen Semen Technology
  • Upgradation of Taluk Level Hospitals
  • Operation Flood III
  • Technological Mission for Dairy Development
  • Launching of National Project on Rinderpest Eradication
  • Formation of A.P. Sheep Development Co-operative Federation
  • Control of Rinderpest disease by Mass Vaccination
  • Formation of Andhra Pradesh Livestock Development Agency

Abundant Livestock Wealth

  • Andhra Pradesh is well known for its livestock wealth. The State has the world famous breed of Ongole Cattle and Aseel breed of poultry which is the principle source for the development of broiler breeds in the world.
  • Andhra Pradesh is also famous for Nellore breed of Sheep, which is well known for quality mutton production.
  • Presently Andhra Pradesh stands first in poultry population (498.84 lakhs) second in buffalo (91.40 lakhs) and sheep population (77.87 lakhs), third in pig population (6.48 lakhs) fourth in bovine population (200.79 lakhs) and seventh in goat population (43.29 lakhs) in the country.

Trends in Livestock Population:

  • During the period from 1956 to 1983, buffalo and cattle population increased by 46% and 17% respectively. During 1983-1993 buffalo population has marginally increased by 5% but the cattle population decreased by 18%, while there is an increase of 23% in crossbred cattle and decrease of 13% in non-descript cattle. Adult female cross-bred cattle have increased by 44.7% between 1987-1993.

  • The most significant trend has been the remarkable increase in female buffaloes by 97%. There is an increase in female young stock and decrease in male young stock. The trends reflect a change in priority from draught animal production to milch animal production.

  • The sheep population remained more or less constant, while there is slight increase in goat population. However, the most significant growth is seen in poultry with a fourfold increase in their population.

Livestock population, over various census periods

S. No.
Livestock 1956 1966 1972 1977 1987


Dairying with buffaloes has the following advantages

  • Complements crop production
  • Utilizes marginal lands and non-marketable farm products
  • Utilizes readily available family labour
  • Requires minimal cash and technology
  • Non-market oriented production with low degree of economic risk
  • Have 5% higher digestibility of crude fibre than high yielding cows
  • Have 4-5% higher efficiency of utilization of metabolic energy for milk production
  • Can gain as much as 1 kg body weight per day on good quality roughages and concentrates
  • Produce milk with 7% fat
  • Can be maintained wholly on stall fed conditions
  • Utilize cellulosic wastes and other agro-industrial by products efficiently
  • Can digest crude fat, calcium, phosphorus and non-protein nitrogen more efficiently than other ruminants
  • Have superior ability to handle wide range of grazing one as and Have higher dry matter intake with longer retention time in the digestive tract

Livestock is reared by small farmers so as to

  • Reduce the risks of crop failure
  • Accumulate capital (as savings)
  • Render services (e.g.: draught, traction, organic manure, fuel)
  • Provide food / nutrition and generate steady income and
  • Cater to the cultural needs


Live stock production in India

  • The production levels of major livestock products like Milk, Eggs and Meat are the indices of progress in livestock sector.
  • The milk production has increased from 2.0 million tons per annum in 1980 to 4.47 million tons in 1996-97 implying an annual growth rate to 161 gms inspite of rapid growth in human population, which is a remarkable achievement. Similarly per capita availability of eggs increased from 5 per annum in 1950 to 75 in 1996-97.
  • The present estimated production of Milk is 4.47 million tons, 5659 million Eggs and 102 thousand tons of Meat per annum. The overall value of various livestock products and byproducts in the state is estimated to be around Rs. 3,364 crores per annum (1994).
  • Significant emphasis is laid on Livestock Development Programmes in

    9th plan with an overall objective of enhancing the production levels of Milk, Meat and Eggs. It has been envisaged to increase the per capita consumption of Milk from 161 gms to 214 gms, Eggs from 75 to 90 and

    Meat from 1.5 kg to 3 kg by the end of the 9th plan to meet the nutritional needs of our population.

Present status and Prospectus of livestock production in India

  • Increased animal production would be almost a by product of general economic development
  • Additional feeds for livestock, particularly green forages and cereal grains were expected to become available once immediate human food needs were met.
  • Livestock numbers would decrease with the mechanization of agriculture and as farmers recognise the advantages of keeping one good animal rather than several poor ones
  • From the projected figures of 2000, it is contrary to believe that livestock population is likely to be reduced along with increased productivity from the use of superior genetic material, the population of livestock has increased steadily with moderate increase in production. The number of livestock and their production figures increased in 1991.
  • Reduction in number would further improve the feed availability leading to still greater productivity
  • Rising prosperity would create demand for animal products
  • To assist this general livestock development, programmes of breed improvement, health care, extension, training, education, research developments have been launched.

Present status

  • The National Commission on Agriculture (NCA) has observed that the production per animal has not increased, nor have the livestock numbers decreased.
  • The cattle population has inconsistently increased from 1950-51 to 1993 at an overall rate of 3.52 percent per annum
  • The buffalo population during the same period has increased more consistently at an overall rate of 1.40 percent per annum
  • The milk and meat production during the same period increased at an overall rate of 1.46 and 5.10 percent per annum respectively.
  • Both population and animal production have steadily increased
  • The faster rate of growth in cow milk as compared to buffalo milk after 1977 has been recorded which may be due to contribution of crossbreeds whose number became about on million in 1992.


  • Increase in cultivated area
  • Greater amounts of feed stuffs available as a result of expansion in the cultivated area
  • Higher yields of wheat and rice straws and bran
  • Increased intensity of grazing on public lands which is not regulated
  • The role of economics of livestock production from a farmer's and a landless owner's point of view
  • Fragmentation of land holdings
  • Intensive multiple cropping

Future trend

  • Indian crop-livestock system may have to gradually shift to increase the farmer's income
  • It seems that with increasing urbanization, development of transport infrastructure and increasing population density, there will continue to be a faster increase in demand of milk, meat and eggs which perhaps has been responsible for faster rate of growth of these products during 1982-92 period. This trend is likely to continue.

  • In view of economic development, improved transport infrastructure, substitution of animal draft power with mechanical power and farm yard manure with chemical fertilizers, the traditional complement between crop and livestock in terms of providing draft power for tillage and transport, farm yard manure for soil fertility maintenance and improved labour productivity through improve nutrition might be disappearing.
  • Due to reason discussed, the livestock productivity is likely to increase further. However, for increased productivity, the programmes related to productivity have to be strengthened.

For enhancing livestock productivity the various programmes launched include

  • Development of infrastructure viz, network of veterinary hospitals, dispensaries, first-aid centers, located within 5 km of villages; Key Villages Blocks (KVB), Intensive Cattle Development Projects (ICDP), Central Cattle Breeding farms, Military Dairy Farms, State Animal Husbandry Departments, Co-operative Dairy Federations, Central & State Agricultural Research & Training Institutions including ICAR institutions like National Bureau of Animal Genetic Resources etc.
  • These facilities provide superior male germ palsm of important indigenous breeds, exotic dairy breeds and buffaloes, maintain indigenous and exotic breeds, records performance data, maintain herd books, maintain data and gene bank for rare and endangered species.
  • Projects launched viz, to modernize India's dairy industry and to flood the metros with milk:
  • Anad pattern dairy co-operative have been started under the aegis of National Dairy Development Board (NDDB) called "Operation Flood" Technology Mission on Dairy Development (TMDD) was launched to apply modern technology to improve productivity.
  • Breeding strategies viz., introduction of crossbred cows, emphasis on gentic improvement of buffaloes.
  • Management and health care strategies include design of cheap houses and equipments which can optimise production under different agro-clmatic conditions, disease prevention and control diagnostic service and the development of immuno-biologicals, strengthening of pharmaceutical industry.
  • Marketing, credit and insurance strategies viz. Formulation of rational pricing policy, providing credit along with technical inputs for various livestock's activities through bank like National Bank of Agriculture & Rural Development (NABARD), Gram Vikas Bank, Rural Development Banks (and the system of lead banks and by the National Co-operative Development Corporation (NCDC) for co-operatives.


Project for dairy industry

Type of projects

The type of milk processing plants projects that are normally considered for financial assistance are.

Milk chilling plants

  • It involves collection of milk from the villages, chilling the milk to 3-40 C and transporting to the main dairy for further processing it and manufacturing of products.

Market Milk Plants

  • It involves procurement of milk from the villages, chilling, pasteurization, homogenization, packing of milk of various brands (whole, standardized, toned and double toned milk) and supplying them to the consumers. The surplus fat is converted into ghee or table butter or sold as cream of bakeries.
  • Composite Milk Processing Plants : It involves the collection of milk and processing into market milk and products like milk powder, cheese, butter, ghee, etc.

Potential areas

  • The scope for financing milk processing activities exists in the entire country. However, it is limited in East and North Eastern parts of the country because of under utilization of existing processing capacity, low milk production and scatteredness of production base.

Project details

Land and location

  • Ample space is required for buildings, future expansion, parking of transport vehicles and for empty cans. About two acres of land is required for a milk processing plant handling about 10000 litres of milk per day (8 hours). However the built up area to total area should be around 1:3 ratio.
  • The location of a plant should be close to the milk producing area in case of products manufacturing unit and if liquid milk is the main product it should be close to the consumer.
  • The location of site should have proximity to road/rail facilities, services, such as water, electricity and effluent mains, social infrastructure, etc.
  • The subsoil of the site should be firm with proper drainage.

Layout and buildings

  • The civil works comprises of factory building, quarters, office, garages, security post etc.
  • he factory building for the milk reception, quality control, processing, packing and storage of milk products should be as per the BIS.
  • The total covered area depends on the processes involved, products manufactured, the quantity of milk handled and the equipment chosen for services and product manufacturing. About 4000 sq. ft. area of building is required for handling 10000 litres of milk.

Plant and machinery

  • The section-wise equipment required, their specifications, quantity, source of purchase and costs are to be given. The machinery should be as per the BIS. Most of the dairy machinery are manufactured in the country by ALFA-LAVAL, L&T, HMT, Nichrome Pvt Ltd, Samarpan Fabricators, Goma Engineering Ltd, etc.



  • Land requirement : 2 acres

  • Milk handling capacity : 10000 litres/day

  • Products to be manufactured : Toned milk, Standard milk, cream, Ghee

  • Market : Domestic

  • Cost of the project : Rs. 116.581 lakhs

  • Bank loan : Rs. 87.436 lakhs

  • Margin money (Down payment) : Rs. 29.145 lakhs

  • Financial viability (at 15% DF) :

  • B C R : 1.12 : 1

  • N P W : Rs. 134.75 lakhs

  • I R R : > 50%

  • F R R (Considering income tax liability) : > 50%

  • Repayment period : 6 years with one year grace period