From protection to competitiveness: How FTAs can help India become a global dairy export leader

India is the world’s largest milk producer, yet it accounts for a small share of global dairy trade. The gap between production and exports is fueling a broader debate over the role of free trade agreements (FTAs): should India continue using these trade ties primarily to protect its dairy farmers from imports or leverage them to make the sector globally competitive?

According to industry experts, India needs a balanced approach. In the short term, the focus should be on protecting the dairy sector from imports. At the same time, FTAs should be leveraged to push long-term reforms in productivity, quality, food safety, processing, and infrastructure.

In 2024-25, India produced 247.87 million tonnes of milk, retaining its position as the world’s largest milk producer. Yet its share in the global dairy export market remains less than 1% of its output as most milk is consumed domestically.


In April, Commerce Minister Piyush Goyal reiterated that India had offered no dairy tariff concessions in its FTAs, including agreements with the European Union (EU), the UK, New Zealand, and Australia. The cautious approach reflects the structure of India’s dairy economy. Unlike developed dairy markets dominated by large commercial farms, India’s dairy sector supports around 80 million small and marginal farmers, many of whom own only a few animals.

While protecting the livelihoods of millions of small and marginal dairy farmers remains critical, experts are of the view that India’s long-term strategy should focus on preparing the sector for greater global competition and securing better market access for Indian dairy products.

“India should now focus on productivity, quality and efficiency and make its dairy sector globally competitive,” says Rupinder Singh Sodhi, former managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF), which markets products under Amul brand.

He says India’s approach to dairy protection is linked not only to the sector’s economic importance but also to the livelihoods of farmers and the country's food security. “A sharp rise in imports could put pressure on domestic milk prices and farmer incomes, potentially discouraging production over the long term,” he says.

So, India must prepare its dairy industry for greater competition by improving animal productivity, nutrition, genetics, healthcare and processing efficiency, he says.

India’s dairy sector needs to increase milk productivity per animal through better genetics, balanced nutrition and preventive healthcare, while strengthening quality standards, food safety, certification and digital traceability, experts said.

Divya Kumar Gulati, Chairman of CLFMA of India, says the shift should be from “protection only” to “protection with competitiveness”.

Production volumes alone do not translate into export competitiveness, he says. “The next phase of growth should focus on increasing milk yield per animal through scientific breeding, balanced compound feed, mineral supplementation, preventive animal healthcare, and better disease management,” says Gulati.

According to him, modern milk collection systems, cold-chain infrastructure, automated processing, internationally accepted quality certification, residue monitoring, and digital traceability would be essential to meet the requirements of premium export markets.

FTAs as a catalyst for domestic reforms
Experts say FTAs could be used as a catalyst for reforms in India’s dairy ecosystem, particularly by pushing the industry towards internationally accepted standards.

India produces nearly 25% of global milk but accounts for less than half a percent of dairy exports. “Improving farm-level quality, bulk milk chiller and processor-level quality management, and digital traceability from ‘cow to container’ could help close this gap, says Rupesh Mukherjee, practice lead at TechnoServe India.

He says that India’s trade policy could provide transition periods and safeguards for sensitive segments while linking such protection to a clear timeline for upgrading the domestic dairy supply chain. “Trade commitments could become the mandate for domestic investment,” Mukherjee says, pointing to requirements such as Codex-aligned aflatoxin M1 and antibiotic residue limits, which require functioning testing infrastructure, trained inspectors, and compliance systems at the farm level.

Ravin Saluja, Director of Sterling Agro Industries, believes FTAs could become a powerful reform instrument if market-access commitments are accompanied by improvements in standards and infrastructure. “Protection was necessary when millions of small dairy farmers were still building basic market access. But long-term competitiveness cannot come from tariffs alone,” says Saluja.

Export market requirements for traceability, residue monitoring, certified cold chains, and internationally accepted quality systems could encourage investment in milk collection, digital procurement records, laboratory networks, and processing efficiency, he says.

However, experts cautioned that FTAs alone cannot drive the required reforms.

India must first strengthen its regulatory framework, particularly at the primary production level, says Kuldeep Sharma, a dairy expert. “Before talking about FTAs, India needs to fix its regulatory framework,” Sharma says, stressing the need for stronger standards for milk production, collection, transportation, and handling.

He says milk vendors should be properly registered and cold-chain requirements strengthened, while traceability and quality certification should be built into the system from the grassroots level.

India needs to focus on value-added dairy exports
Experts say India’s large domestic market is one of the key reasons why dairy exports remain relatively limited. A substantial share of milk production is consumed domestically, leaving limited exportable surplus. However, they argue that India need not aim to export every dairy product. Instead, the focus should be on identifying segments where India can build a sustainable competitive advantage in the global market.

Sharma identifies whey as a potentially promising opportunity, along with butterfat, butter, cheese, paneer and other value-added products. “India has traditionally been better at white-label manufacturing than at building globally recognised brands,” he says, adding that the country should use its manufacturing capabilities to develop value-added products and target global markets where it has a competitive edge.

Saluja says India should focus on products such as ghee, paneer, dairy ingredients, traditional fermented products and specialised milk powders.

Gulati also suggests that the dairy sector should focus more on value-driven products, rather than the amount produced, with greater emphasis on products such as cheese, whey proteins, dairy ingredients, lactose derivatives, infant nutrition ingredients, specialised milk powders, and functional dairy products.

This would help India move away from exporting occasional commodity surpluses towards building long-term branded and ingredient-based dairy businesses, say experts.

Productivity remains the biggest challenge
Several experts highlighted low animal productivity as one of the biggest structural constraints facing India's dairy sector.

Rajender Singh, Managing Director of Paras Dairy, says protection had given the dairy sector time to develop, but the next phase would require a stronger focus on productivity. He calls for genetic improvement, better feeding practices, silage, and artificial insemination to become more widespread across the sector.

“Global players were not successful due to sheer scale but consistency, litre after litre, season after season,” says Singh.

Loni Godbole Tewari, Co-founder of Occamy Bioscience, says dairy farming needs to be treated as an enterprise rather than merely a part-time activity alongside agriculture. She calls for better animal nutrition and healthcare, breed improvement and greater focus on milk quality at the source.

Milk should be tested not only for fat and solids-not-fat (SNF), but also for antibiotic residues, somatic cell counts, and animal health indicators, she said. Farmers producing higher-quality milk should receive better prices, while milk testing equipment should be properly calibrated and linked to traceability systems.

Selective opening, not unrestricted imports
Experts differ on the extent to which India should open its dairy market under FTAs, but most agree that a calibrated approach was necessary.

Sharma supports allowing certain imports of high-quality products, specialised ingredients, and technologies that could strengthen domestic capabilities, while still protecting sensitive products, such as liquid milk.

He says such an approach could introduce competition and expose Indian companies to global standards without putting millions of dairy farmers at risk.

India’s dairy sector is fundamentally different from developed dairy economies, where dairy is largely a commercial business. In India, it remains a major livelihood source for millions of farmers, says Sodhi.

India, he says, would eventually need to expand its export footprint as domestic milk production rises. If surplus milk is not absorbed through processing or exports, domestic prices could fall, affecting farmer incomes and discouraging production. “India will have to export. If we don’t take out the surplus, prices of milk will crash in India, and farmers won’t get the returns. If prices fall, production will decrease.”

FTAs must deliver market access
Experts say India’s future trade agreements should not focus only on keeping foreign dairy products out. They should also secure meaningful market access for Indian products.

Mukherjee says India’s ongoing trade negotiations with markets in Southeast Asia and the Gulf could create opportunities for Indian dairy ingredients, while achieving compliance with stringent European standards could potentially open doors to other premium markets. “An FTA should actively support export market access for Indian products,” he says.

According to Sodhi, India should challenge high tariff and non-tariff barriers in major dairy-producing countries and seek greater access for its dairy exports.

Experts say mutual recognition of certifications, faster approval of Indian dairy plants, science-based sanitary and phytosanitary standards, and reduced non-tariff barriers should be key priorities in future FTAs.

The industry also needs to address issues such as foot-and-mouth disease (FMD), animal identification, and end-to-end traceability, experts say. Better traceability systems could track the animal, farmer, and milk from source to processing.

Farmer protection and global competitiveness must go together
Industry stakeholders broadly agree that India’s dairy policy should remain farmer-centric while allowing greater competition and private investment.

Dairy expert Kuldeep Sharma says government support should follow the farmer rather than being tied to whether milk is supplied to a cooperative, public-sector entity or private dairy company. “The government should focus on creating the right ecosystem and ensuring that farmers have choices. It should not try to run the dairy business itself.”

Indu S, Co-founder of GoKrit, says India needs to strike a balance between protecting farmers and improving the quality, traceability, and reliability of the dairy value chain.

India’s objective, as per experts, should not be to become an exporter of every dairy product but to build globally competitive capabilities in carefully selected, higher-value categories.

The consensus emerging from the industry is that India’s future FTA strategy should combine protection with competitiveness, giving vulnerable dairy farmers adequate safeguards while using trade agreements to push domestic reforms, improve global standards, secure market access, and build a stronger export-oriented dairy industry.

For India, the challenge is no longer simply producing more milk. It is to ensure that the milk produced is of consistent quality, competitively priced, traceable, and capable of being converted into high-value products that can compete in global markets.