Dairy Processing Industry in India – Business Opportunities & Advantages

India, the world's leading milk producer, accounted for 24% of global production in 2021-22, marking a remarkable 51% increase over the past eight years, totalling 221.06 million tonnes. The country's dairy market is poised for substantial expansion, with an anticipated growth from 124.93 billion in 2023 to 227.53 billion by 2030, indicating an 8.94% CAGR. Currently, only 15% of milk production is managed by the organized sector, leaving ample room for domestic and international processing. India has witnessed significant exports of dairy products like butter, ghee, cheese, and skimmed milk powder to countries such as the UAE, USA, Saudi Arabia, and Singapore. Investing in milk processing facilities and exploring new markets offers lucrative opportunities, further supported by substantial foreign direct investment, showcasing the confidence of global entities in India's dairy industry.

Key Features of Indian Dairy Products

• India's dynamic dairy sector, growing steadily at 6%, offers attractive investment avenues in milk processing technologies, high-quality farms, emerging tech, and packaged fresh milk. Stakeholders can leverage these opportunities to capitalize on the industry's expansion and meet the rising demand for dairy products in the country.
• The Indian market for Skimmed Milk Powder (SMP), valued at USD 1.6 billion in 2021, is of substantial importance. With an expected 13% CAGR from 2021 to 2026, SMP presents appealing investment prospects for entrepreneurs. This upward trajectory allows stakeholders to enter the SMP industry and benefit from its promising potential.
• India's dairy sector growth lies in value-added products, offering returns of 20-30%. Segments like flavored milk, butter, ghee, ice cream, yogurt, and cheese show significant growth potential. The yogurt market is set to reach USD 6.02 billion, and the cheese market, USD 1.5 billion. By investing in these areas, stakeholders can meet the expanding market demand and profit from the Indian dairy industry's projected growth.
• Meeting the increasing demand for high-quality, organic Direct-to-Consumer (D2C)/A2 milk in India presents investment opportunities. On-farm chilling and processing in captive dairy farms can yield an EBITDA of 10-15%, while collecting top-quality milk from nearby farmers for urban supply can result in an EBITDA of 6-8%. Investors can tap into this growing market for premium and organic dairy products by leveraging these models.

Required Documents to set-up a Plant in India

• Raw material receiving and traceability records
• Records for receipt of packaging materials
• Certificate for Virgin/food-grade packing material
• Certificate of Ink approved for use for milk and milk products packet
• Quality Control/Lab test reports records
• External testing reports for chemical test reports
• ETP Compliance Records with details of discharge Effluent & its Compliance
• Records of samples picked up by FSSAI/State FDA authorities
• Certificates of Analysis/COA
• Internal and external audit records/Corrective action (CAPA)

Licenses and Registration to Commence Operations in India

• Consent NOC
• FSSAI License
• Dairy License
• Factory License
• GST Registration
• Trade Mark Registration

Government Support

The Dairy Processing Industry in India receives substantial support from the government through various grants and policies. Noteworthy initiatives include the National Programme for Dairy Development, the Dairy Processing & Infrastructure Development Fund, the Animal Husbandry Infrastructure Development Fund, the Rashtriya Gokul Mission, the Pradhan Mantri Kisan Sampada Yojana, and the National Livestock Mission. These programs play a crucial role in fostering the growth and development of the industry, providing essential financial assistance and infrastructure for dairy processing activities across the country.

Required Raw Materials

• Raw Milk
• Water
• Additives, Flavourings, Emulsifiers, Colourings etc.
• Packaging Materials
• Additional ingredients depending upon the specific product

Required Machinery and Equipment

• Milk Reception Equipment
• Milk Storage and Cooling Equipment
• Pasteurisation Equipment
• Homogenisers
• Separators
• Evaporators & Dryers
• Packaging Equipment
• Cleaning-in-Place (CIP) Systems

Essential Facilities in a Dairy Processing Plant in India

• Raw Milk Reception Dock (RMRD)
• Processing Hall
• Products Manufacturing Area
• Packing Area
• Cold Storage
• Quality Control Laboratory

Projected Costs

To establish a Dairy Processing Plant with a daily milk processing capacity of 10,000 liters, approximately 2 acres of land is required. The land acquisition alone amounts to INR 4 Crores (USD 0.5 Million), while an additional INR 4 Crores is needed for setting up the plant and machinery. Business owners must also factor in expenses related to milk procurement, transportation, employee salaries, and packaging materials. Consequently, the total investment for establishing a Dairy Processing Plant in India typically ranges from INR 11-12 Crores (USD 2 Million).

Conclusion

In conclusion, the Dairy Processing Industry in India stands as a powerhouse of growth and opportunity. With India being the largest global milk producer, the industry has witnessed remarkable advancements and support from the government through various schemes and grants. The continuous increase in milk production, coupled with significant investments in processing technologies, presents a promising landscape for entrepreneurs and investors. The Indian Dairy Processing Industry showcases immense potential for growth, innovation, and economic development. With the right policies, investments, and a focus on sustainable practices, the sector is poised to further strengthen India's position as a leading player in the global dairy market.


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