India’s Milk Production to Grow 5% Annually, Says Ind-Ra Report

India’s milk production is projected to expand by around 5% year-on-year in the near to medium term, further strengthening its position as the world’s largest producer of milk, according to a report by India Ratings and Research (Ind-Ra). The agency estimated that milk output in FY25 grew by 5% on a yearly basis.

In FY24, India’s milk production rose by 3.78% to 239.3 million tonnes, supported by favourable government policies and the sector’s critical role as a supplementary income source for rural households. “The country’s dairy industry has seen remarkable growth, reinforcing its status as the world’s leading milk producer. In FY24, India’s milk production rose 3.78% YoY to 239.3 million tonnes, supported by favourable government policies and the sector’s importance as a supplementary income source for millions of rural households, especially women and marginal farmers,” said Anuradha Basumatari, Director at Ind-Ra.

Key Role in Rural Economy

The dairy sector remains the backbone of rural economic activity, with milk contributing nearly 19.8% of India’s total agricultural output in FY24. Small and marginal producers dominate the sector, underlining its deep social and economic relevance.

Ind-Ra further expects per capita milk availability to grow by about 4% in the near to medium term, higher than the 3.9% growth recorded between FY20 and FY24. With population growth moderating at just 1%, the increase in supply is expected to improve overall nutritional availability.

Rising urbanisation, higher disposable incomes, and a growing appetite for dairy products are seen as key drivers of demand. Per capita availability of milk in India has climbed from 406 grams per day in FY20 to 471 grams per day in FY24.

Between FY20 and FY24, the dairy industry recorded a compound annual growth rate (CAGR) of 9.1%. Milk and dairy products consistently account for the second-largest share of household food expenditure after cereals, pulses, and breads, averaging 20.7–22% of total food spending over the last decade.

The report highlights that cooperatives will continue to dominate milk procurement. Of the marketable surplus—estimated at 160 million tonnes in FY24—organised players, including cooperatives and private companies, handled 32% or about 51 million tonnes. Dairy cooperatives alone managed 24 million tonnes.

The cooperative model remains a reliable system for farmers, ensuring that 80–82% of milk sale proceeds are paid directly to producers. Regular and transparent payments also provide dairy farmers with a faster cash cycle compared to crop farmers, who typically receive income only after harvest.

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