India’s milk output to grow 6% in FY27 despite weak monsoon risks

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New Delhi: India’s milk production is expected to rise 6% to about 263 million tonnes (mt) this fiscal year (FY27) despite concerns over an emerging El Niño and forecasts of a sub-normal monsoon potentially hurting farm output and fodder availability, dairy experts said.

Higher milk output is expected on the back of an increase in livestock population, better breeding, veterinary care, and expansion of dairy infrastructure through the addition of nearly 75,000 new dairy cooperatives, they said.

"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," Meenesh Shah, chairman of both National Dairy Development Board (NDDB) and Mother Dairy, told Mint.

The projection is significant for India—the world’s largest milk producer and consumer—and for the global market, where Indian milch animals meet nearly a quarter of total demand. Milk and dairy products remain staples in Indian households, with the country's annual milk production reaching 248 million tonnes (mt) in FY26.

The expected rise in milk production gains significance at a time when the India Meteorological Department (IMD) has cut its forecast for monsoon rains to 90% of the long-period average (LPA), raising concerns over farm output, fodder availability and rural incomes. A weaker monsoon typically weighs on agricultural production and purchasing power in rural India, with spillover effects on allied sectors.

According to Shah, the dairy sector is expected to remain insulated from major climatic shocks due to structural improvements and ongoing expansion efforts. He said that milk production is expected to increase by up to 6% in FY27.

India’s share of global milk production stood at about 25% in FY25. However, low productivity per animal remains a concern. According to Shah, India’s average annual milk yield per animal stands at around 2,000-2,200 kg, lower than the 10,000-12,000 kg recorded in developed regions such as North America.

Also, the central government is strengthening dairy productivity through data-driven livestock management and genetic improvement programmes. The Pashudhan platform is digitising livestock records, enabling better animal tracking, breeding management, health monitoring and targeted delivery of welfare schemes.

According to Shah, India’s dairy market is increasingly shifting towards organised players such as cooperatives and private brands, even as loose milk still dominates several regional markets. Shah added that only 30-35% of India’s marketable surplus milk is handled by organised players, while the unorganised segment continues to dominate the sector, accounting for nearly 65-70% of the market.

"India currently procures nearly 130-135 million litres of milk daily, with cooperatives and private companies accounting for almost equal shares. For the long-term sustainability of the dairy economy, maintaining a strong cooperative network alongside an expanding private sector will be crucial. Such a balance is expected to foster competition, improve efficiency and encourage cooperatives to address operational gaps over time," said R.S. Sodhi, former managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF) and former president of the Indian Dairy Association.

"Government support for animal husbandry and the wider adoption of artificial insemination have helped improve herd productivity. At the same time, the sector continues to benefit from strong domestic demand, with milk and dairy products remaining household staples. Consumption of value-added products such as paneer, curd, cheese, butter and ghee is also rising steadily, particularly in urban markets," said Jayatheertha Chary, managing director, Mother Dairy.

The expected increase in milk production could also support India's dairy exports, which have witnessed a mixed trend in recent years. According to data from the Directorate General of Foreign Trade (DGFT), India's dairy product exports rose by 80.6% to $492.85 million in FY25 from $272.91 million in FY24. However, exports declined by 17.4% to $407.18 million in FY26.

"Higher milk production will create additional export opportunities for India's dairy sector. Dairy cooperatives will be able to channel the increased surplus into value-added products for overseas markets, helping improve farmers' incomes and strengthen India's position as a reliable supplier of dairy products globally," said Binod Anand, a cooperative economist and member of the high-powered committee on minimum support price and agricultural reforms.

To be sure, Punjab’s dairy cooperative sector is gearing up for a major expansion to boost milk production while creating livelihood opportunities for rural communities through stronger village-level cooperative networks and the addition of more milching animals.

“We are currently procuring and processing nearly 25 lakh litres of milk per day and plan to raise both procurement and processing capacity to 35 lakh litres daily by the end of FY27. The target will be achieved by increasing the number of milch animals and establishing new village-level cooperative societies,” said Ajit Balaji Joshi, secretary, cooperation-cum-chairman of Milkfed Punjab.

Meanwhile, a senior executive from Bihar State Milk Co-operative Federation Ltd, which markets dairy products under its popular brand Sudha, said that the state is also working to significantly scale up its livestock and allied sector output over the next few years.

“The state’s milk production currently stands at 128.53 lakh metric tonnes per year and is targeted to rise to 159.9 lakh metric tonnes by 2028. Milk processing capacity, currently at 48.55 lakh litres per day, is projected to increase to 51.7 lakh litres per day over the same period,” the executive said on the condition of anonymity.

Vijay C. Roy is a journalist with over 21 years of experience covering various news beats across different organisations such as Business Standard and The Tribune. In the past, he has covered beats such as finance, auto, MSME, commodities, FMCG, pharmaceutical, agriculture, IT/ITES, infrastructure and start-ups. He joined Mint in February 2025, and covers agriculture, food processing, fertilizers, environment and climate change, bringing over two decades of experience reporting on farm policy, food inflation, crop trade, and rural livelihoods.<br><br>Vijay’s areas of reporting include food security and climate change policies, focusing on their impact on different stakeholders and their implications. His expertise lies in simplifying complex agri-economic issues such as edible oil import dependence, cotton and wheat trends, fertiliser subsidies, and climate-related risks. He has covered key developments including global supply disruptions and evolving trade policies, offering both macroeconomic perspective and field-level context. Known for his credible and balanced reporting, he follows a rigorous, fact-based approach that prioritises accuracy and context. He is driven by a commitment to public interest, aiming to make critical agricultural and economic issues accessible while contributing to informed policy and industry discussions.

Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also ...