Dairy Industry in India Under Trade Liberalisation

Abstract

India is the largest producer of milk after the USA. It’s fast-growing domestic market for milk and milk products in the world leaves it with a little surplus for external trade. Unlike in developed countries, the dairy sector is yet to be established as an independent economic activity in India. The sector continues to be a supplementary activity to the crop production sector for most of the farmers. Dairy contributes 28% to the Gross Value Added (GVA) in agriculture and allied activities in India. In India, cattle rearing and milk production is a potential source of income for farmers to fall back during a crisis in the crop production sector. However, India’s share in world trade of dairy products is not commensurate with its size of the domestic market and the scale of production. A major bottleneck in the world market is the low productivity of milch animals in India. It is argued that dairying in India is still subsistence in character and growth of the sector is largely driven by domestic demand. The protection available to dairy farmers in the domestic market for dairy products in India has declined under trade liberalisation. This poses a threat to the millions of small-scale farmers employed in the sector. Therefore, government interventions become necessary for supporting the sector.