Govt sets eyes on foreign investment in dairy sector

The Centre has called a meeting of major private players engaged in the animal husbandry sector, particularly the dairy industry, on July 8 to raise foreign investment in this area.

The Centre has targeted Rs 100,000 crore investment in the dairy industry from private players in the next few years, which will include foreign direct investment (FDI). According to official sources, just around Rs 114 crore FDI has come into the dairy sector between 2010 and 2016.

“We have initiated discussions with the World Bank and the Japan International Cooperation Agency for increasing their investments in the dairy and animal husbandry sector and will intensify our engagement with them,” Devendra Chaudhury, animal husbandry secretary, told Business Standard.

The move has gathered added impetus after the Center relaxed norms for FDI in animal husbandry by allowing research in non-controlled conditions as well.

Even before that foreign investment was allowed in most aspects of the dairy and fisheries sector, including equipment and machines.

With milk production and demand rising exponentially, the Center is looking at the private sector and foreign majors like Danone to increase their investment in India. It is seeking investment in milk processing, marketing and infrastructure like chillers.

The wider objective of encouraging private players to invest in the dairy industry is to gradually lower the role of the unorganized sector in India’s milk production.

Of the country’s total milk production of around 160 million tonnes, 48 per cent is sold in the market. Of this, around 20 per cent is supplied by the organised sector, which includes both the private sector and cooperatives, while the rest comes from the unorganised sector. The organised sector operates on low margins and usually purchases milk from farmers at low prices.

Officials said with the help of FDI and other investments, the share of the organized sector in India’s annual milk production would be enhanced. This will also help in effective transfer of technology. India, despite being a major milk producer, has a limited share in the world export market. Private investment, particularly FDI, can push this up.