Overview of the Dairy Industry in India
India has been the largest milk-producing country in the world for the last 25 years. The Indian dairy market is the largest in the world, accounting for 23% of global milk production. The dairy industry consists of 2 connected businesses, i.e. operating a dairy farm and processing the milk (pasteurisation, skimming, homogenising, fortifying and packaging). Both these businesses have also been significant contributors to the country’s economy, and many processing units are emerging as thriving businesses in all corners of the country. Dairy farming is also a crucial component of the industry. The most significant share of the market in dairy farming is held by the cooperative sector, which is owned, operated, and controlled by dairy farmers. The industry function with the collective cooperation of numerous farmers and cooperative organisations with gaushalas and small-capacity animal farms.
Farm owners sell their products to dairy plants which then process and manufacture different milk products. On the other hand, the dairy industry requires a planned collection, transportation, processing, quality testing and distribution of the products in a very short period. Many dairy units also maintain their own dairy farms and gaushalas and use their products in processing. Along with these come many exercises, such as managing sheds, cleaning the farm, feeding the cattle, or even washing and milking animals that can complicate the work. However, the profits associated with packaged and processed milk and its products are much higher than the sale of loose milk. So farmers choose to sell the product to the business that can not only manage the operation at a large scale but also impart value addition to the product, such as greater shelf life, taste, flavour and a broader market reach. The products made in the dairy industry include
- Butter Milk
- Milk Cream
- Dairy Whitener (WMP & SMP)
- Cheese, curd yoghurt, paneer
- Skimmed milk powder
- Whole Milk
- UHT milk
- condensed milk, fermented milk and flavoured milk.
Advantages and Scope of Export in the Dairy Industry
The demand for milk and its products is high in all seasons. Also, starting a dairy farm business in India costs approximately 10 to 20 lakhs. India’s export of dairy products has witnessed a steady rise over the last three years. In 2021-22, India exported 108,711 MT of dairy products to the world for a total of Rs. 2,928.79 crores (US$ 391.59 million), with crucial export destinations being Bangladesh, UAE, Bahrain, Malaysia, Saudi Arabia and Qatar. The National Dairy Plan (a framework for the industry centred on sustainable growth) and general empowerment programmes, such as the Jan Dhan Yojana and the Start-up India initiative, were among the government's measures that helped infrastructure for dairy farming. These business activities have a huge scope in many states that are the leading producers of milk and its products. The following table shows the capacity of the top 5 milk-producing states and their share in the market.
Production (in MMT)
Share in Total Production
How is Dairy Business Profitable?
Starting a dairy farm or a processing plant is referred as 'an all-season opportunity' as the demand for milk and its products is stable throughout the year or even increasing. Milk production in India shows an increase of 3 to 4% each year.
For all these reasons, the dairy farming and processing business is emerging as a thriving market for entrepreneurs. Moreover, the milk business involves eco-friendly practices, and by-products from the farms can be used in many ways. For instance, cow dung can be decomposed in biogas plants to produce natural gas and can also be used as an organic manure for growing crops and fodder for animals. Whereas in processing plants,no significant by-product is generated as all milk components are commercially important.
How to Setup a dairy Business
The dairy farm business in India does not require employing highly skilled labour. Let’s look at the conditions for dairy farms and processing plants in the following sections, one–by–one.
Setting up a dairy farm
The dairies/gaushalas may be categorised based on the number of animals (adult cows & female buffaloes) in a dairy/gaushala, i.e. Category-I (up to 25 animals), Category-II (26-50 animals), Category-III (51-75 animals), Category-IV (76-100 animals) and Category-V (above 100 animals). The prerequisites to run a dairy farm include registration in the local veterinary and dairy development department. For the licence to start a dairy farm, one needs to contact Municipal Corporation Department or a local panchayat based on the place where the dairy farm will be setup.
Setting up a Dairy Processing Plant
For starting a processing plant, the entrepreneur must focus on estimating the capacity, process scheduling and appropriate Plant layout and managing the by-products and the waste generated from the plant. The Dairy processing plant has to comply with provisions of the Industrial acts (Factories Act), Pollution control rules, Boiler Acts, labour-related rules etc. The stages through which the milk is processed in the Dairy Processing Plant are as follow.
- Reception Section
- Processing section
- Storage and packaging Section
- Refrigeration Section
Records Keeping in a Dairy Processing Plant.
- ETP Compliance Records with details of discharge Effluent & its Compliance.
- Raw material receiving and traceability records (including records for milk being received from BMCs, milk collection centres chilling centres).
- Quality Control /Lab test reports records/ Microbial test records/ Compositional analysis for raw milk, processed milk and milk products.
- External testing reports for chemical test reports/ Microbiological test reports pertaining to milk and milk products, food ingredients, additives etc
- Certificates of Analysis/COA
- Internal and external audit records/ Corrective action (CAPA).
- Records for receipt of packaging materials and COA/Supplier certification.
- Certificate for Virgin / food-grade packing material
- Certificate of Ink approved for use for milk and milk products packet.
- Testing record of Packaging materials.
- Records of samples picked up by FSSAI/State FDA authorities
- Receiving records for raw materials and additives (other than milk)
Licences and Authorisation Required by Dairy Industry
The following licences will be required to set up a dairy processing plant and dairy farm/gaushalas, depending on the type of activity they perform.
The Pollution Control Board Certificate of plant or manufacturing unit is a prerequisite for setting up a dairy industry in India. Dairy and dairy products processing on a small scale have been listed in the Orange Category as they are water and air-polluting. At the same time, gaushalas are categorised in the green category. Milk processing and dairy products manufacturing, installed as integrated projects, is categorised in the red category of industries. Documents required for the consent certificate include
- Duly filled Application Form of concerned SPCB.
- Site or layout plan with a roadmap
- Detailed Project Report.
- Details of the manufacturing and finished products
- Details of installed waste treatment measures and pollution control measures
- list of machinery, the capital cost of the unit
- water balance, source of water, and its required quantity
- Land documents such as rent /lease agreement
- Industry Registration Documents.
- Consent fee (as applicable)
- Balanced Sheet Certified by a CA
- Lab report of the trade emissions and effluents
- Copy of any permission required from the State Government
- Any additional document mentioned in the application form
This is required for the Registration of Manufacture/Suppliers/Dealers/Retailers of dairy products.
The stakeholders in the dairy industry have to obtain BIS certificates in the following manner.
BIS IS 11799: 1968 (R2002) for cattle housing in rural areas
BIS IS 11942: 1986 (R2002) for gaushalas and other organised milk producers
BIS IS 11942: 1986 (Reaffirmed 2004): for a loose housing system for animals
HACCP implementation in Dairy Industry
The dairy industry has 2 distinguishing features - it uses many different processes like drying, concentrating, fermenting, canning and freezing to manufacture a wide variety of products. Secondly, a pasteurisation step is applied to control many microbiological hazards without changing the product. Therefore, HACCP is essential as it sets a goal to minimise the associated risks during production and reduce unacceptable unsafe products. Sanitation Standard Operating Procedures (SSOPs), and Good Manufacturing Practices (GMPs) & Good Hygiene Practices should be considered prerequisites for HACCP.
Additional Licences and Permits required by Dairy Processing Plant
- Trade License from the local authorities
- SSI or MSME Registration with the Udyog Aadhaar Registration (if applicable)
- Trade Mark Registration
- GST registration for tax purposes
Government Initiatives to Boost Dairy Industry
The government has brought several initiatives to develop the dairy industry in India. With a series of steps being taken by the Government and the private sector in developing this sector, India is expected to sustain its momentum in milk production and processing in the coming decades. A few initiatives undertaken by the government to further boost the opportunities in the dairy sector in India are Rashtriya Gokul Mission, National Programme for Dairy Development (NPDD)and Dairy Entrepreneurship Development Scheme (DEDS).
Market Overview of the Dairy Industry
The industry contributes 5% to the nation's economy and supports more than eight crore small and medium-scale farmers. India's dairy industry has grown over the past ten years, supported by various initiatives taken by the government. The nation's milk production increased at a CAGR of 6.2% from 146.31 million tonnes (MT) in 2014-15 to 209.96 MT in 2020-21. Butter exports are anticipated to reach 15,000 metric tonnes in 2022, a 36% increase above the revised 11,000 metric tonnes export total for 2021. India exports value-added dairy goods such as milk albumin, milk powder, butter, butterfat, cheese infant food preparations, and spreads.
How will Enterclimate Assist You?
One-Stop Solution licencing and authorisation-related formalities
We provide comprehensive assistance for all required legalities to set up a dairy farm and processing plant in any state. Our packages include legal assistance in setting up your dairy business.
Expert Solutions by Experts
Our team comprises industry experts from various domains like waste management laws, environmental law etc. We make the licencing and permit process possible on time, and that too at pocket-friendly prices.
Best Client support
Enterclimate has a pan- India network of customer relations executives. We ensure that communication with our clients is up to their satisfaction by addressing concerns related to the business promptly and precisely.