Dairy exports from India: prospects of anhydrous milk fat

In 2024-25, the country's total milk production reached 247.87 million tonnes, accounting for nearly a quarter of the global figure. Meanwhile, export volumes remain below 1 percent. The production of butter and ghee amounted to 5.1 million tonnes, and exports in 2024 generated about $330 million, with the main shipments directed to the Persian Gulf. Structural constraints are due to the fact that milk fat is predominantly consumed domestically, while ghee is mainly exported rather than neutral industrial anhydrous milk fat (AMF). Constraining factors also include limited market access, food safety requirements, and the trader-based sales model.

To develop exports, it is proposed to utilize two directions: processing surplus raw materials into neutral AMF for geographically advantageous markets, as well as establishing bonded or special economic zones (SEZs) for importing commodity milk fat with subsequent processing and re-export. Barriers include domestic fat distribution, product non-compliance, unequal trade access, plant registration rules and residue standards, as well as a lack of infrastructure for bulk fat storage.

The most promising destinations in the short term are named the Persian Gulf regions and Bangladesh due to logistics and access conditions. In the Persian Gulf, India maintains advantages over suppliers from New Zealand and the EU due to its halal status, developed diaspora, and fast delivery. In South Asia, Bangladesh is a key destination, while SAFTA preferences and a short delivery route allow for increasing volumes with the potential to enter Nepal and Sri Lanka. In addition, the construction of facilities in North and West Africa is being considered, where the dairy deficit in 2023 reached $6.4 billion, and Algeria and Nigeria import a significant share of dairy products.