New Delhi: The Indian dairy sector, which has emerged as the world’s largest milk producer and a backbone of the rural economy, is expecting further GST rationalisation, infrastructure upgradation, and policy support in the Union Budget 2026.
According to a Press Information Bureau (PIB) report, India ranks first in global milk production, contributing nearly a quarter of the world’s supply. The country’s total milk production rose 3.58% year-on-year to an estimated 247.87 million tonnes in 2024–25, compared to 239.30 million tonnes in 2023–24.
Dairy remains the largest agricultural product in India, contributing around 5% to the national economy and directly employing over 8 crore farmers, underscoring its critical role in food security and rural livelihoods.
“The dairy sector is a cornerstone of India’s food security and rural economy, directly supporting millions of farmers and allied livelihoods,” said Dr. K. Rathnam, Whole-Time Director & CEO of Milky Mist Dairy Food Ltd. He added that the Union Budget 2026 presents a timely opportunity to accelerate the next phase of growth for the sector.
Dr. Rathnam said the industry expects a balanced and forward-looking Budget that strengthens farmer incomes, upgrades infrastructure, and enables organised dairy players to scale sustainably. “This will create long-term value for the sector and reinforce India’s position as one of the world’s leading dairy economies,” he added.
Expectations from Budget 2026
Dr. Rathnam said the sector would welcome continued government support on the GST front, with further scope for rationalisation of key inputs such as packaging materials, refrigeration equipment, animal feed, and veterinary services. He noted that easing GST on these inputs would help curb rising cost pressures and improve efficiency across the dairy value chain.
He also stressed the need for a strong policy push to strengthen cold-chain infrastructure, calling it critical for reducing wastage and maintaining milk quality.
Highlighting financing challenges, Rathnam said that enhanced capital subsidies, interest subvention schemes, and easier access to long-term credit would help bridge infrastructure gaps, particularly in hinterland regions.
He added that incentives for both dairy companies and farmers are equally important. Initiatives focused on productivity enhancement, fodder development, animal health, affordable cattle insurance, and cold-chain logistics could significantly improve farmer incomes while ensuring consistent milk supply.
“From an industry standpoint, incentives for value-added dairy products, automation, advanced quality-testing laboratories, and sustainability initiatives will encourage private players to invest in modern, scalable capacity aligned with global standards,” Dr. Rathnam said.
An EY report also pointed out the need to promote the dairy, fisheries, and livestock sectors to support income diversification in rural areas.
Read More: Revitalising Mizoram’s Dairy Sector: MULCO Signs MoU with NDDB
Dairy Allocations in Budget 2025–26
In the Union Budget 2025–26, the government allocated ₹7,544 crore to the Ministry of Fisheries, Animal Husbandry and Dairying, accounting for about 0.15% of total government expenditure, according to the Indian Dairy Association.
Of this, the Department of Animal Husbandry and Dairying received ₹4,840.40 crore, up from ₹4,521.24 crore in Budget 2024.
The government also allocated:
- ₹1,790 crore to the National Programme for Dairy Development (NPDD)
- ₹460 crore to the Infrastructure Development Fund
Industry stakeholders believe higher and more targeted allocations in Budget 2026 could play a decisive role in transforming India’s dairy sector into a more efficient, resilient, and globally competitive industry.
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