India and the U.S. are reportedly on the verge of finalising a trade deal that would reduce tariffs and allow India to import soybeans, maize, and a few dairy products duty-free. Tariff cuts under discussion could bring duty rates down to between 12 and 15% or 15–19% on various industrial and agricultural goods. The deal will provide India with access to U.S. maize for ethanol production, potentially benefiting both the livestock feed and biofuel sectors. India faces a tough balancing act: protecting its smallholder dairy farmers from cheap imports while leveraging cheaper feed inputs.
India and New Zealand are in advanced talks for a bilateral free-trade agreement (FTA), yet dairy remains a politically sensitive sector for the Indian side. Trade negotiations must reflect “the size and scale of each country”, and cannot blindly adopt standards used with large economies. For India’s vast cooperative dairy sector — involving millions of small and marginal farmers — the announcement is a major reassurance. The Indian minister reaffirmed that “India never compromises on the interests of dairy, farmers and MSMEs.” Bilateral cooperation with New Zealand could focus on dairy machinery, automation and “mini-dairy” units, rather than full market liberalisation of export-facing dairy commodities.
India’s milk consumption is poised for further expansion in 2025, buoyed by improving incomes, changing consumption habits and stronger organised dairy infrastructure. According to FAS’s recent Global Agricultural Information Network (GAIN) report, household demand for fluid milk in India is set to reach around 91 million metric tons (MMT) in 2025, up from about 89 MMT in 2024. At the same time, factory-use consumption of fluid milk—i.e., milk processed in the organised sector—is projected at 125.5 MMT in 2025, up from 122.7 MMT in 2024. This growth is being driven by several structural factors. First, the sheer size of India’s population and its growing middle class mean that even modest upward shifts in milk consumption per household translate into large incremental volumes. Second, rising disposable incomes and heightened awareness about nutrition are leading consumers to favour branded, packaged dairy products (milk, yoghurt, cheese, butter, etc.), which in turn drives the organised sector’s share. The GAIN report highlights that while per-capita consumption remains below the benchmark set by the Indian Council of Medical Research (ICMR), there is clear momentum in both rural and urban markets. Despite robust production capabilities, there are regional disparities in consumption and supply chain constraints such as cold chain logistics, variable productivity of milch animals and feed/fodder shortages. Volume growth alone is no longer sufficient. With consumption rising, the premium will shift to quality, traceability and value-addition.
India’s dairy sector is showing a mix of resilience and volatility, as highlighted in Zerodha’s A Glass Half Full for Indian Dairy. The latest quarterly results of listed dairy companies—Hatsun Agro, Heritage Foods, and Dodla Dairy—reflect both the opportunities and pressures shaping the industry. These results paint a picture of a sector where companies with diversified sourcing and strong VAP offerings outperform those more dependent on a single region or bulk milk trade. A major theme emerging from the analysis is the pressure of raw milk inflation. Unusually heavy monsoon rainfall this quarter created fodder shortages, hindered milk collection networks, and tightened supply. Dairies were simultaneously pushed to divert milk toward cream, butter and ghee production, which saw surging festive demand. This dual squeeze—tightening supply and higher fat-product demand—placed upward pressure on procurement prices. Companies with wider catchment areas or strong fat inventories were better positioned to absorb the shock, while others saw margin compression. Value-added products have become the defining factor for profitability. Strong branding combined with VAP capability appears to be the strongest formula for growth in the Indian dairy landscape. Banglar Dairy, the West Bengal government’s own milk brand, has raised its retail milk prices by Rs 4 per litre, effective November 2025. According to the state’s Animal Resources Development department, the price revision was necessitated by rising production costs — notably heavy rainfall this year that disrupted fodder supplies, increasing raw material and transportation expenses. Milk production in Bengal has been growing at about 9.76 % annually, but input cost pressures meant the co-operative needed to adjust pricing to remain viable. But prices of other dairy products such as ghee, paneer and curd remain unchanged at present.