1
Milk and Dairy Sector
World Scenario
The annual world trade in milk products (excluding intra-EU) amounts to 33
million tonnes, valued at US$ 10 billion. Barely 6 to 7% of the world milk
production is traded internationally. The bulk of the world dairy trade is in
cheese, butter and powders. A growing shift towards cheese is expected in the near
future. Two dynamic products with a substantial projected growth in the coming years
are yoghurt and dessert.
The international dairy trade is dominated by four players - EU, New Zealand, Australia
and USA - which together account for 85% of all exports. New Zealand and Australia
export as much as 80 and 50% of their milk production respectively. The Asia-Pacific
region has been and will remain a net milk importer in the foreseeable future. It accounts
for the bulk of milk powder imports and half of the imports of condensed and
evaporated milk. In contrast, most cheese imports go from developing countries to
developed countries such as Japan and the United States.
The dairy industry is regulated in most countries through various ways. Imports are
commonly restricted, and exports frequently subsidised. High dairy price supports in
many countries are put in place to stimulate production to the extent that subsidies
for exports are necessitated to maintain domestic dairy programmes.
Technology Export Potential of Milk and Dairy Sector
In the United Kingdom, all the milk produced by farmers
is procured by the cooperatives. Private dairies are
required to buy their milk requirement from cooperatives.
New Zealand has no private sector dairy plants. As many
as 90 per cent of dairies in the erstwhile West Germany
and 100 per cent in Denmark, Netherlands and Sweden are
in the cooperative sector.
In the United States, 70 per cent of the dairy industry is
cooperative. Dairy programmes are subject to more
Government participation or regulation than most other
domestic agricultural industries in the USA. There are also
Federal Milk Marketing Orders and movement barriers in
the USA for “orderly marketing control, which is associated
with stabilising fluid milk prices, providing secure and
dependable markets for individual dairy farmers, primarily
for the fluid market and improving the balance of market
power between farmers and handlers.
In the emerging liberalised global scenario, trade-distorting
agricultural policies have been the focus of the GATT
multilateral trade negotiations. With the liberalisation of
agricultural trade under the new GATT regime, the heavy
subsidies prevalent in the dairy sector in the countries of
the EU as well as in the USA will have to be brought down
in the next few years. The competitive advantages of the
Indian dairy industry are then considered to be substantial.
With substantial and continued investment in building up
milk production, India can emerge as a major exporter of
dairy products and technologies in the next few decades.
With substantial and
continued investment in
building up milk
production, India can
emerge as a major
exporter of dairy products
and technologies in the
next few decades.
Technology Export Potential of Milk and Dairy Sector
3
Indian Scenario
India has one of the largest livestock population in the
world. Fifty percent of the buffaloes and twenty percent of
the cattle in the world are found in India, most of which are
milk cows and buffaloes.
Dairy development in India has been acknowledged the
world over as one of modern India’s most successful
developmental programme. Today, India is the largest milk
producing country in the world.
Milk and milk products is rated as one of the most promising
sectors which deserves appreciation in a big way. When the
world milk production registered a negative growth of
2 percent, India performed much better with 4 percent
growth. The total milk production is over 72 million tonnes
and the demand for milk is estimated at around 80 million
tonnes.
By 2005, the value of Indian dairy produce is expected to be
Rs. 1,000,000 million. In the last six years foreign investment
in this sector stood at Rs. 3600 million which is about oneforth
of the total investment made in this sector.
Manufacture of casein and lactose, largely being imported
presently, has good scope. Exports of milk products have
been decanalised.
The milk surplus states in India are Uttar Pradesh, Punjab,
Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh,
Karnataka and Tamil Nadu. The manufacturing of milk
products is concentrated in these milk surplus States.
Today, India is the
largest milk producing
country in the world.
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Technology Export Potential of Milk and Dairy Sector
The production of milk products i.e. milk products
including infant milk food, malted food, condensed milk
& cheese stood at 3.07 lakh tonnes in 1999-2000. Production
of milk-powder including infant milk-food had risen to 2.25
lakh tons in 1999-2000, whereas that of malted food is at
65000 tons. The trends in production of milk products in
India is given in Annexure 1.
Cheese and condensed milk production stands at 5000 and
11000 tonnes respectively. Some plants are coming-up for
producing lactose, casein and improved cheese varieties.
Livestock Population
India is rich in its livestock wealth. It accounts for nearly
15.8% of the world cattle population, more than half of the
world buffalo population. As per FAO production year book
1998, the population of cattle, buffaloes, sheep and goats in
the world and in India is given in Annexure 2.
As per the 1992 livestock census of Ministry of Agriculture,
highest cattle population was reported in Madhya Pradesh
(28.68 million nos.) followed by Uttar Pradesh (25.63 million
nos.) Bihar (22.15 million nos.) Maharashtra (17.44 million
nos.) and West Bengal (17.45 million nos.). According to
livestock census the highest population of buffaloes is
reported in U.P. (20.08 million nos.) followed by A.P.
(9.15 million nos.), M.P. (7.97 million nos.) and Rajasthan
(7.74 million nos).
Production of Milk and Milk Products
The milk production was almost stagnant between 1947 to
1970 with an annual growth rate of merely one percent
Livestock accounts for
nearly 15.8% of the world
cattle population, more
than half of the world
buffalo population.
Technology Export Potential of Milk and Dairy Sector
5
which has since registered a vigorous growth of over 4.5%
per annum after the year 1970. The production of milk in
India has been increasing steadily as shown in Annexure 3.
The major milk producing states are UP, Punjab, Rajasthan,
M.P, Maharashtra and Gujarat. Number of milk products
manufacturing Plants have come up in these states for
Processing of milk.
Present Status
The Indian dairy industry achieved substantial growth
during the 8th Five Year Plan, achieving an annual output of
over 60 million tonnes of milk. This not only places our
industry second in the world after the United States, but
represents sustained growth in real availability of milk and
milk products for our burgeoning population. Most
important, dairying has become an important secondary
source of income for millions of rural families.
Improved genetic material achieved primarily through cross
breeding of cattle and upgrading of the national buffalo
herd has played a significant role in increasing the
productivity. Gradual extension of improved husbandry
practices; increase in consumption of balanced concentrates
made possible, in part, through innovations in the field of
nutrition; expanded area under fodder; greater access to
veterinary care; and advances in the fight against endemic
and epidemic cattle diseases have also contributed to
increased production and productivity.
About three quarters of the milk produced is consumed at
the household level. Of the milk supplied to the market,
about 9-11 percent is processed in over 275 dairy plants and
Dairying has become an
important secondary
source of income for
millions of rural families.
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Technology Export Potential of Milk and Dairy Sector
83 milk product factories operated by cooperative, private
dairy processors, and government milk schemes in the
oroganized sector. Milk channeled through Operation Flood
cooperatives is generally processed in dairy plants located
in the rural areas and then transported into cities and towns.
Operation Flood Milk productions account for about 1 0%
of total milk production or 40% of the marketed output.
The balance (about 90% of total production) is handled by
the private traders and processors.
About 45% of milk production is consumed as fluid milk.
About 35% is processed into butter or ghee; about 7% is
processed into Paneer (cottage cheese) and other cheeses,
about 4% is converted into milk powder; and the balance is
used for other products such as Dahi (yoghurt) and sweet
meats. In recent years, there has been an increasing ice
cream production as foreign companies have invested in
India.
Industry Segments:
1. Cheese
The organised cheese market including its variants like
processed cheese, cheese spreads, mozzarella, flavoured
and spiced cheese, is placed at around Rs 3 bn. Processed
cheese at 50% of the overall market is Rs. 1.5 bn strong. The
next most popular variant is cheese spread claiming a share
of around 30% of the total cheese market. The market is
primarily an urban phenomenon and is know to be
growing at around 15%. The market for cheese cubes slices
and tins is growing. The flavoured cheese segment has been
declining.
In India, Gujarat Cooperative Milk Marketing Federation
(GCMMF) with the Amul brand continues to be the main
About 45% of milk
production is consumed
as fluid milk. About 35%
is processed into butter
or ghee; about 7% is
processed into Paneer
(cottage cheese) and
other cheeses, about 4%
is converted into milk
powder; and the balance
is used for other products
such as Dahi (yoghurt)
and sweet meats.
Technology Export Potential of Milk and Dairy Sector
7
operator in the branded cheese market in India with about
60% market share in the branded market. It pioneered the
market for processed, branded cheese. What GCMMF did
was to develop the technology to make cheese from buffalo
milk. World over it is made from cow milk. Annexure 4
gives the market size of cheese in India.
Other cheese manufacturers are : Britannia Industries,
Dynamix Dairy Industries (DDI), Hiranandani, ETA and
Metro.
2. Ice Cream
The ice cream market in India is estimated to have reached
the level of Rs. 10 bn per annum, of which the organised
sector is about Rs. 6 bn. The unorganised market has been
shrinking. The per capita ice cream consumption in the
country is extremely low at 250 ml per year compared with
that of the US, which is about 22 litre.
The organised market for ice creams of about 60 mn litres,
has been growing at around 15% per annum. The ice cream
industry has, in a short span of time, undergone a structural
transformation. Annexure 5 (a) and 5 (b) shows the growth
of market size of Ice Cream in India and the market structure
of this segment respectively.
3. Chocolates
The Chocolates market is estimated at 35,000 tonnes valued
at approximately Rs. 8.0 bn. The chocolate counter market
is worth nearly Rs. 2.5 to 3.5 bn and the rest is made up of
chocolate bars. Chocolates in fact make up less than a fourth
of the sweet-tooth products including sugar boiled
confectionery mints and chewing gums. Sugar
confectionery is by far the largest segment with a share
Market growth rates
indicate that the cheese
market in India is growing
steadily.
The organised market for
ice creams of about 60
mn litres, has been
growing at around 15%
per annum.
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Technology Export Potential of Milk and Dairy Sector
exceeding 60%. Annexure 6 (a) and 6 (b) gives the market
size are structure of chocolate market in India.
4. Dairy Whiteners
The organised dairy industry processes an estimated 15%
of the total milk output in India. The industry has maintained
a high growth profile, especially in the wake of the
Operation Flood, colloquially also termed as White
Revolution, initiated in early 1980s. Today India produces
over 80 mn tonnes of milk annually. In terms of value, the
total milk economy is estimated at Rs. 1200 bn.
The market for dairy whiteners (commercially know as
beverage milk powders and condensed milk) and creamers
is around Rs. 2,750 mn. The growth of market size of dairy
whiteners in the last 10 years is given in Annexure 7 (a) and
7 (b). Apart from MNCs like Nestle and companies like
Britannia, the Indian enterprises have also made perceptible
progress. Names like Amul, Sapan, Vijaya, Mohan, Parag
and several others have been seen in the marketplace with
their whiteners.
Aseptically packed creamer in miniportions is widely used
in the west, but has yet to enter the Indian market.
Aseptically packed creamer involves techniques to impart
a longer shelf life to the product. It is packed in small cups
ready to be poured into a cup of tea or coffee. Creamer is
fresh milk with increased fat content (upto 12%) and is
aseptically packed after undergoing Ultra Heat Treatment
(UHT) at 140oC. Its introduction will affect the existing
whitener market as a natural milk product with a longer
shelflife.
The organised dairy
industry processes an
estimated 15% of the
total milk output in India.
The industry has
maintained a high growth
profile, especially in the
wake of the Operation
Flood, colloquially also
termed as White
Revolution, initiated in
early 1980s.
Technology Export Potential of Milk and Dairy Sector
9
The potential for exports; especially to neighbouring
countries and the countries in the Middle east, the Gulf and
Africa, also exist and could be exploited.
5. Baby Foods
Conventionally, foods (solids, semi-solids and liquids)
administered to babies of upto two years of age are classified
as baby foods. In some cases, however, baby foods are
continued to be given to children older than of two years
depending on socio-economic, health-related and geosocietal
conventions.
The concept of packaged baby foods is relatively recent in
India. The traditional homemade foods have dominated
this sector until the induction of packaged foods mostly
from multinational companies. Baby foods have assumed
special significance in the recent years because of greater
awareness of hygiene and health and constraints on time
of busy mothers. A reliable, healthy, convenient and readyto-
use baby food is the requirement of the day. India is
catching up with the rest of the developed world in this
area rater fast. A comparison of growth rates over the last
10 years shows that these has been a steady rise of market
size. Annexure 8 (a) and 8 (b) gives the market size and the
market structure of baby foods in India.
The packaged food products for babies are broadly classified
into a) cereal-based such as Nestum; b) cereal-based with
milk such as Farex, Cerelax, c) milk-based such as Lactogen,
d) ready-to-feed liquids, and e) rusks and biscuits. Infant
milk foods constitute the most significant segment.
The potential for exports;
especially to
neighbouring countries
and the countries in the
Middle east, the Gulf and
Africa, exist and could be
exploited.
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Technology Export Potential of Milk and Dairy Sector
6. Biscuits and Bakery Products
The Indian bakery industry is dominated by the small-scale
sector with an estimated 50,000 small and medium-size
producers, besides the 15 units in the organised sector. Apart
from the nature of the industry which gravitates to the
markets and caters to the local tastes, the industry is widely
dispersed.
The two major bakery products, biscuits and bread, account
for 82% of all bakery production. The unorganised sector
accounts for about two-thirds of the total biscuits
production estimated at 1.3 mn tonnes. It also accounts for
80% of the total bread production which is estimated at 1.5
mn tonnes and around 90% of the other bakery products
estimated at 0.6 mn tonnes. The last includes pastries, cakes,
buns, rusks and others. Annexure 9 (a) and 9 (b) gives the
growth of market size of biscuits over the last ten years.
Biscuit is estimated to enjoy around 37% share by volume
and 75% by value of the bakery industry. The organised
sector caters to the medium and premium segments, which
are relatively less price-sensitive. The organised sector is
unable to compete at the lower price range due to the excise
advantage enjoyed by the informal sector.
The organised segment in biscuits has witnessed a steady
growth of about 6%, conforming broadly to the growth
rate of GDP. The production crossed the one-million tonne
mark in 1995-96 which has now grown by estimated 30%.
The size of the bread market is estimated at Rs. 13 bn. There
are a number of producers in both sectors, organised and
unorganised. From a low priced commodity, bread has
The two major bakery
products, biscuits and
bread, account for 82%
of all bakery production.
Biscuit is estimated to
enjoy around 37% share
by volume and 75% by
value of the bakery
industry.
Technology Export Potential of Milk and Dairy Sector
11
graduated into a branded product with discriminating
prices.
7. Confectionery
The Indian confectionery market includes sugar boiled
confectionery, hard-boiled candies, toffees and other sugarbased
candies. In 2000, sugar boiled confectionery had
penetrated an estimated 15% of the households only,
suggesting a large potential for growth. There are about
5,000 units catering to the local markets.
The total volume of the sugar boiled confectionery market
in the organised sector (comprising plain / hard-boiled
candies, toffees, eclairs and gums) is around 125,000 tonnes.
Add to this the unorganized sector and the market for all
types of confectionery is of the order of 250,000 tpa. That
translates into 66% market share of the unorganized sector
by volume. In value terms it is less than 50%.
The sector’s expansion at a rate of 25% in 1998 had dropped
to 17% in 1999 and registered a negative growth of 2% in
2000. In the long run it is slated to grow at 8 to 10% annually.
The growth in the size of the confectionery market is gives
as Annexure 10 (a).
The total volume of the
sugar boiled
confectionery market in
the organised sector is
around 125,000 tonnes.
Add to this the
unorganized sector and
the market for all types of
confectionery is of the
order of 250,000 tpa.
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Technology Export Potential of Milk and Dairy Sector
Exports
Export of certain milk products like milk powder, ghee and
butter was canalised uptil 1993. With the objective of
promoting exports of milk products, the Govt. have
dechannelised the export of these milk products with effect
from mid 1993. According to the EXIM Policy for 1997-
2002, the policy for export of these milk products is as under
:
Powder milk (skimmed or full Cream) whole and infant
milk food, pure milk Ghee and Butter, except when exported
as branded products in consumer packs, not exceeding 5
kgs in weight, will be exempted from the following
conditions :
i) Quantitative ceiling as may be notified by the DGFT
from time to time.
ii) registration-cum-allocation certificate issued by
agricultural and processed Food Products Export
Development Authority (APEDA).
The Director General of Foreign Trade, Ministry of
Commerce vide Public Notice No. 48/RE-98/1997-2002
dated 13th October, 1998 have removed the quantitative
ceiling for export of powder milk and ghee and their export
is now freely allowed. However, butter, if exported in
packaging exceeding 5 kg. in weight, continues to be under
the quantitative ceilings.
Products for exports - Skimmed Milk Powder, Whole Milk
Powder, Ghee, Butter, Cheese, Condensed Milk, Casein etc.
are some of the milk products being exported from India.
With the objective of
promoting exports of milk
products, the Govt. have
dechannelised the export
of these milk products
with effect from mid 1993.
Technology Export Potential of Milk and Dairy Sector
13
The export figures of dairy products during the last five
years are given in Annexure 11.
Major Destinations- UAE (43%), Nepal (19%), Bangladesh
(12%)
Future Markets
South East Asia, Russia and Africa will be the emerging
market for Indian dairy products. In the immediate future,
there is prospect of an additional demand of over 3 million
tonnes of milk products in the ASEAN region alone. The
EU dairy exports will become limited by GATT agreements,
while Australia-New Zealand do not have adequate
production capacity. Equally significant is the rise of Russia
as the world’s biggest dairy importer. Although by far the
biggest milk producer in Europe, the Russian output has
declined by more than 25 percent in the past five years. The
shortfall in milk production is estimated to be 13 million
tonnes a year.
These major deficits in milk availability offer an opportunity
for India to fill this vacuum and to become leading dairy
exporting nations.
Potential for value added products
Ethnic Indian dairy products like Sweets Shreekhand,
Rusgulla, Khoya and Ready-to-Eat-Kheer, Haluwa, etc. have
good demand in the countries where ethnic Indian
population is settled. For promotion of these products, we
require export worthy consumer packing, which also
improves the shelf-life of the product.
South East Asia, Russia
and Africa will be the
emerging market for
Indian dairy products.
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Technology Export Potential of Milk and Dairy Sector
Steps Initiated by APEDA
APEDA has initiated following steps to increase export of
dairy products:
Standards have been laid down for export of dairy products
APEDA is offering subsidies for implementation of HACCP
and ISO 9000, installation and upgradation of laboratories
and market promotion through sending of samples,
printing of catalogue brochures and brand publicity through
advertisement etc. under it’s plan scheme. Export market
development will depend on ensuring the quality. This will
require that exporters ensure quality from the milk animals
to the port and beyond. To build the quality, mechanized
dairy fanning requires encouragement with export oriented
processing facilities. Manufacturing units linked by contract
with large scale producers, can ensure of quality raw
material necessary to enter and maintain the position in the
international market. It is the cow milk which is recognised
in the international market. Since India is producing more
of buffaloe milk, there is a need for generic promotion of
buffaloe milk. Many countries in the world do not import
milk products from India since India is reporting many
livestock diseases particularly FMD. Efforts are, therefore,
needed to control and eradicate FMD at least in major milk
producing States. Creation of chilling facilities at block level/
village level and transportation of liquid milk to processing
units in reefer units.
Technology Export Potential of Milk and Dairy Sector
15
A SWOT Analysis of Dairy Industry in India
Strengths
• Enhanced milk production with consequently
increased availability of milk processing.
• Improved purchasing power of the consumer.
• Improved transportation facilities for movement of
milk and milk products.
• Increasing availability of indigenously manufactured
equipment.
• Large number of dairy plants (252) in public and
cooperative sector besides several others coming up
in the private sector.
• Vast pool of highly trained and qualified manpower
available to the industry.
• Country’s vast natural resources offer immense
potential for growth and development of dairying
With our strengths we have to be aware of our weaknesses
also.
Weaknesses
• Tropical climate conditions.
• Seasonal fluctuations in milk production pattern.
• Species-wise variation (buffalo, cow, goat etc.) in milk
quality received by milk plants.
• Lack of marketing avenues for the dairy produce.
Threats
• Introduction of foreign products in Indian market.
Vast pool of highly
trained and qualified
manpower available to
the industry.
Country’s vast natural
resources offer immense
potential for growth and
development of dairying
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Technology Export Potential of Milk and Dairy Sector
• Increasing chemical contaminants as well as residual
antibiotics in milk.
• Poor microbiological quality of milk.
• Export of quality feed ingredients particularly cakes
under the liberalization policy.
• Deficiency of molasses, a rich source of energy and
binding agent in feed industry and constituent of urea
molasses mineral lick.
• Excessive grazing pressure on marginal and small
community lands resulting in complete degradation
of land.
• Extinction of the indigenous breeds of cattle due to
indiscriminate use of crossbreeding programme to
enhance milk production.
• The liberalisation of the Dairy Industry is likely to be
exploited by multi-nationals. They will be interested
in manufacturing milk products which yield high
profits. It will create milk shortage in the country
adversely affecting the consumers.
Inspite all these problems and threats we have clear cut and
tremendous opportunities before us
Opportunities
• Great improved export potential for milk products of
western as well as traditional types.
• Established and expanding market for traditional dairy
products.
• Increasing demand for fluid milk as well as value added
products.
The liberalisation of the
Dairy Industry is likely to
be exploited by multinationals.
Increasing demand for
fluid milk as well as value
added products.
Technology Export Potential of Milk and Dairy Sector
17
• By product Utilization for import substitution.
• Employment generation.
• Growing demand for milk and milk products.
• Liberalised policies in dairy sector.
• Availability of large resources of unconventional feeds
and fodders
• Availability of diverse germplasm with unique features
like heat tolerance, disease resistance, draftability and
ability to survive and produce under stress conditions.
• Availability of animal production technologies for
faster development and effective implementation.
• There should be an integrated structure of marketing
for milk and milk products.
• Integrated structure for livestock marketing through
regulated markets.
• Improved collection of data on contract basis through
agencies.
• Market information intelligence system for milk and
milk products.
• Development of software for project formulation for
dairy enterprise.
Policies in Milk & Milk Products
Milk and Milk Products Order (MMPO) regulates milk and
milk products production in the country. The order requires
no permission for units handling less than 10,000 litres of
liquid milk per day or milk solids upto 500 tpa.
Milk and Milk Products
Order (MMPO) regulates
milk and milk products
production in the country.
All the milk products
except malted foods are
covered in the category
of industries for which
foreign equity
participation upto 51% is
automatically allowed.
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Technology Export Potential of Milk and Dairy Sector
All the milk products except malted foods are covered in
the category of industries for which foreign equity
participation upto 51% is automatically allowed. Icecream,
which was earlier reserved for manufacturing in the small
scale sector, has now been dereserved. As such, no license
is required for setting up of large scale production facilities
for manufacture of ice cream.
Subsequent to dechannelisation exports of some milk based
products are freely allowed provided these units comply
with the compulsory inspection requirements of concerned
agencies like: National Dairy Development Board, Export
Inspection Council etc. Bureau of Indian standards has
prescribed the necessary standards for almost all milk based
products, which are to be adhered to by the industry.
Regulatory Environment in the Dairy Processing
Sector in India
The Indian processed dairy industry has grown and
diversified enormously in the last few years. To ensure the
proper development and growth of this industrial sector,
the Government of India has instituted various laws and
regulations. The various regulations that govern the dairy
processing industry can broadly be classified into:
Compulsory Legislation
Prevention of Food Adulteration Act, 1954
This Act is the basic statute that is intended to protect the
common consumer against the supply of adulterated food.
This specifies different standards for various food articles.
The standards are in terms of minimum quality levels
Technology Export Potential of Milk and Dairy Sector
19
intended for ensuring safety in the consumption of these
food items and for safeguarding against harmful impurities
and adulteration. The Central Committee for Food
Standards, under the Directorate General of Health Services,
Ministry of Health and Family Welfare, is responsible for
the operation of this Act. The provisions of the Act are
mandatory and contravention of the rules can lead to both
fines and imprisonment.
Milk and Milk Product Order (MMPO) 1992
The Milk and Milk Product Order (MMPO), 1992, issued on
June 9, 1992 seeks to ensure the supply of liquid milk, an
essential commodity, to consumers by regulating its
processing and distribution. Within eight years of its
operation, the Central/State Registering Authorities have
till December 2000 registered 666 units with a total
processing capacity of 65.8 million litres per day (mlpd).
Salient Features of the MMPO Order include the following:
– Registrations for units handling up to 75,000 litres of
milk per day are granted by the State Governments
and units with more than 75,000 litres per day capacity
are registered by the Central Registering Authority.
– The Certificate also specifies the milkshed area, which,
under the order is defined as a geographical area
demarcated by the Registering Authority for the
collection of milk by the registered unit.
– Maintenance of specified hygienic conditions in the
premises where milk and milk products are handled,
processed, manufactured or stored.
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Technology Export Potential of Milk and Dairy Sector
The collection, transportation and processing of milk
normally centres around the operations of a processing plant.
The region from which the marketable surplus of milk
production finds its way to a processing plant is called a
‘milkshed’. The concept of milkshed areas is pivotal to the
MMPO. For an orderly development of the dairy industry, a
proper assignment/allocation of milkshed is critical.
Standards on Weights and Measures
(Packaged Commodities) Rules, 1977
These Rules lay down certain obligatory conditions for all
commodities that are packed form, with respect to
declarations on quantities contained. These Rules are
operated by the Directorate of Weights and Measures, under
the Ministry of Food and Civil Supplies.
a) Voluntary Standards
There are two organizations that deal with voluntary
standardization and certification systems in the food
sector. The Bureau of Indian Standards looks after
standardization of processed foods and
standardization of raw agricultural produce is under
the purview of the Directorate of Marketing and
Inspection.
b) Bureau of Indian Standards (BIS)
The activities of BIS are two fold, the formulation of
Indian standards in the processed foods sector and
the implementation of standards through promotion
and through voluntary and third party certification
systems. BIS has on record, standards for most of
processed foods. In general, these standards cover raw
Technology Export Potential of Milk and Dairy Sector
21
materials permitted and their quality parameters,
hygienic conditions under which products are
manufactured and packaging and labelling
requirements. Manufacturers complying with
standards laid down by the BIS can obtain and “ISI”
mark that can be exhibited on product packages. BIS
has identified certain items like food colours/additives,
vanaspati, containers for packing, milk powder and
condensed milk, for compulsory certification.
c) Directorate of Marketing and Inspection (DMI)
The DMI enforces the Agricultural Products (Grading
and Marketing) Act, 1937. Under this Act, Grade
Standards are prescribed for agricultural and allied
commodities. These are known as “Agmark”
Standards. Grading under the provisions of this Act is
voluntary. Manufacturers who comply with standard
the laid down by DMI are allowed to use “Agmark”
labels on their products.
Other Government Regulations :
1) Industrial Licence:
No licence is required for setting up a Dairy Project in
India. Only a Memorandum has to be submitted to
the Secretariat for Industrial Approvals (SIA) and an
acknowledgment is to be obtained. However
Certificate of Registration is required under the Milk
and Milk Products Control Order (MMPO) 1992.
2) Foreign Investment:
Foreign Investment in dairying requires prior
approval from the Secretariat of Industrial Approvals,
Ministry of Industry, as dairying has not been included
22
Technology Export Potential of Milk and Dairy Sector
in the list of High Priority Industries. Automatic
approval will be given upto 51% Foreign Investment
in High Priority Industries. In case of other Industries,
proposals will be cleared on case to case basis.
Government may allow 51% without enforcing the
old limit of 40% applicable under Foreign Exchange
Regulations Act at its discretion.
