India’s dairy sector is projected to maintain strong growth momentum in FY27, with milk production expected to increase by around 6% to approximately 263 million tonnes, despite concerns over a potential El Niño event and forecasts of a below-normal monsoon.
Industry experts believe that improvements in livestock productivity, expansion of dairy infrastructure, enhanced breeding programmes, and wider adoption of technology will help the sector overcome climate-related challenges and sustain growth.
Growth Driven by Livestock Development and Cooperative Expansion
India’s annual milk production reached approximately 248 million tonnes in FY26, reinforcing the country’s position as the world’s largest milk producer. The expected increase in FY27 is being attributed to a combination of factors, including growth in livestock numbers, better veterinary services, improved breeding practices, and the expansion of organized dairy networks.
According to Meenesh Shah, Chairman of National Dairy Development Board and Mother Dairy, the addition of nearly 75,000 new dairy cooperatives across the country is expected to play a key role in strengthening milk procurement and farmer participation.
“The production growth in FY27 will be driven by an increase in livestock population, deployment of technology, and the expansion of dairy infrastructure through the addition of nearly 75,000 new dairy cooperatives,” Shah said.
Monsoon Risks Remain a Key Concern
The positive outlook comes despite weather-related uncertainties. The India Meteorological Department has reportedly revised its monsoon forecast to around 90% of the Long Period Average (LPA), raising concerns about fodder availability, crop production, and rural incomes.
An emerging El Niño event could affect rainfall distribution in several agricultural regions, potentially impacting feed resources and livestock productivity. However, experts believe that ongoing investments in dairy infrastructure and animal health services will help mitigate some of these risks.
Bridging India’s Productivity Gap
While India contributes nearly 25% of global milk production, average milk productivity per animal remains significantly lower than in developed dairy-producing nations.
Current annual milk yield per animal in India is estimated at approximately 2,000–2,200 kilograms, compared with 10,000–12,000 kilograms in countries such as the United States and Canada.
To address this gap, the government is promoting scientific dairy farming practices and expanding digital livestock management initiatives through platforms such as Pashudhan Platform, which supports:
- Animal identification and tracking
- Breeding management
- Health monitoring
- Vaccination records
- Welfare scheme delivery
Industry experts believe these interventions can significantly improve productivity and reproductive efficiency in the coming years.
Organized Dairy Sector Continues to Expand
India’s dairy industry is gradually moving toward greater formalization, with cooperatives and private dairy companies increasing their share of milk procurement and processing.
Currently, only 30–35% of marketable surplus milk is handled by the organized sector, while the unorganized segment still accounts for nearly 65–70% of the market.
The country procures approximately 130–135 million litres of milk per day, with cooperatives and private dairy companies contributing nearly equal volumes.
The ongoing expansion of dairy cooperatives and investments in processing infrastructure are expected to accelerate the shift toward organized dairy marketing.
Rising Demand for Value-Added Dairy Products
Domestic demand continues to be a major growth driver for the sector. Consumption of value-added dairy products such as:
- Paneer
- Curd
- Cheese
- Butter
- Ghee
- Flavoured milk
- Dairy beverages
has been increasing steadily due to rising incomes, urbanization, and changing consumer preferences.
Industry leaders believe that higher milk availability will support both domestic consumption and the development of value-added dairy segments.
Export Opportunities on the Horizon
Improved milk production could also strengthen India’s dairy export potential. Dairy exports rose sharply by 80.6% to USD 492.85 million in FY25 from USD 272.91 million in FY24, demonstrating growing international demand for Indian dairy products.
Read More: PPCB and Verka Launch Plastic-Free Milk Vending Initiative in Punjab
Although exports declined to USD 407.18 million in FY26, industry stakeholders remain optimistic that increased milk availability, improved quality standards, and stronger processing capabilities could open new export opportunities, particularly in value-added dairy products.
Outlook for FY27
Despite weather-related challenges, India’s dairy industry remains on a strong growth trajectory. Expansion of cooperative networks, adoption of technology, genetic improvement programmes, and rising demand for dairy products are expected to support continued growth in milk production.
If current projections are achieved, India could produce approximately 263 million tonnes of milk in FY27, further strengthening its position as the world’s leading milk producer while creating new opportunities for millions of dairy farmers across the country.
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