How to Start a Dairy Product Business in India?

Are you thinking about entering the dairy product business in India? The need is consistent since milk and its products are a staple in almost every Indian home. People can't get enough of it, whether it's cheese for the weekend pizza party, dahi for the everyday meal, or ghee for the kitchen. But where do you begin? What do you need? What will the price be? Don’t worry, we've got you. In this blog, we have created a comprehensive guide to help you start a dairy product business soon.

Why Start a Dairy Product Business in India?

India is the greatest producer and consumer of dairy products in the world, making it a goldmine for anyone wishing to enter the dairy industry. In 2024, the dairy market in India was estimated to be worth USD 135.30 billion. The market is estimated to increase from USD 146.80 billion in 2025 to USD 274.09 billion by 2032, showing a CAGR of 9.33% during the forecast period.

For entrepreneurs hoping to capitalize on the constantly rising demand for dairy products, India offers a promising field. The options are numerous and diverse, ranging from delicious butter to hydrating yogurt and wholesome cheese. Establishing a dairy product company in India can be an attractive endeavor, but it calls for rigorous preparation, hard work, and in-depth industry knowledge.

India offers a strong chance to launch a dairy product business for several reasons:

Huge and Expanding Market

Dairy products and milk are essential to the Indian diet, and the country's per capita consumption is already higher than the world average and is still growing. A large and expanding population, along with rising disposable incomes and urbanization, is fueling a continuing increase in the demand for both liquid milk and value-added dairy products. The value a goods like cheese, yogurt, flavored milk, paneer, and ghee are becoming more popular, particularly in metropolitan areas. Opportunities for larger profit margins are presented by this. The Indian dairy industry is anticipated to grow significantly over the next several years, which will make it a desirable area for entrepreneurship and investment.

Strong Agricultural Foundation

Millions of farmers, many of whom are small-scale producers, rely on the dairy business for jobs and revenue, making it a vital sector of the rural economy. For agricultural households, dairy farming frequently serves as an additional source of income, improving their financial security.

Initiatives and Support from the Government

National Dairy Plan (NDP) and Other Programs: The Indian government has started a number of programs to increase milk output, upgrade processing facilities, and provide financial aid and subsidies to dairy farmers and business owners. Government programs like as the Dairy Processing and Infrastructure Development Fund (DIDF) are designed to strengthen cooperatives, increase milk production, and upgrade processing facilities.

Untapped Potential and New Developments

The Indian organized dairy market is growing quickly, which suggests a move toward branded and packaged goods and presents chances for new competitors. The market for premium, clean, and pure dairy products is being driven by rising health consciousness and awareness. The rise of direct-to-consumer (D2C) dairy companies is opening up new channels for reaching customers and brand loyalty, frequently through the use of internet platforms. Growing interest in organic dairy, A2 milk, and new dairy products caters to certain customer niches and gives premium pricing options. India might greatly increase its dairy exports due to rising global demand.

Entrepreneurial Opportunities

From the production and processing of raw milk to the creation and marketing of numerous value-added products, the dairy industry provides a broad range of business options. Supply chain management, packaging, and product creation all have room for innovation. Smaller dairy farming or value-added product manufacturing units can be established with comparatively less capital, especially with government backing, whereas large-scale processing plants require a substantial investment.

Step-by-Step Guide to Starting a Dairy Product Business

Starting a dairy product company can be rewarding and financially successful. The dairy sector in India is enormous and expanding, particularly in light of consumers' increased need for high-value, fresh, and organic goods.

What is your business model?

Selecting the type of dairy business you wish to operate is the first step. The most popular models are as follows:

• Farming Dairy

You generate milk by raising cows or buffalo. You can supply dairy processors with raw milk or sell it directly.

• Processing Dairy

You purchase raw milk and turn it into ghee, paneer, butter, curd, and other products. Excellent for markets in cities and semi-cities.

• Dairy Products with Added Value

Prioritize specialized or high-end products such as: Cheese (cheddar, mozzarella), Yogurts with flavors, Ghee, and organic/A2 milk, Kulfi or ice cream, Probiotic beverages.

Tip: Start small with 1–2 products and expand as your brand achieves popularity.

How do you make a business plan?

Your dairy business plan should include:

• Range of products
• Analysis of the market and competition
• Model of business (B2B, B2C, D2C)
• Purchasing raw materials (milk sourcing)
• Infrastructure and equipment requirements
• Budget estimate
• Profit margins and pricing
• Marketing and distribution plan
• Evaluation of risks

A basic Word or Excel document is a fantastic starting point because it keeps you organized.’

What About the Legal Procedure?

The legal and compliance issues will need to be handled by you:

Choices for Legal Entities:

• Sole Proprietors
• LLP or partnership
• Private Limited Firm

Important Registrations & Licenses:

• FSSAI License – Mandatory for any food business
• Shop & Establishment Act License – For your workplace
• Trade License – From local municipal authorities
• BIS Certification – Optional, but adds trust for milk standards

How Do You Set Up Your Infrastructure?

Based on the size and nature of the goods, you will require:

• Basic Setup
• Clean and ventilated processing unit
• Sufficient drainage and water delivery
• Backup power

Essential Equipment:

• Milk pasteurizer
• Homogenizer for yogurt or curd
• Cream separator
• Paneer press
• A butter churner
• Freezers and cold storage
• Packaging equipment
• Kits for quality testing

Start small; semi-automatic or old machines work well for this.

How Will You Purchase Milk?

There are two options available to you:

• Tie-up with local farmers or cooperatives
• Run a modest dairy farm (10–50 animals)
• Important Quality Measures: Fat Percentage (between 3 and 6%).
• SNF (Solids Not Fat): Influences flavor and taste
• Level of hygiene: Prevent contamination

Before processing milk, always test it. In dairy, quality is paramount!

Focus on Packaging & Storage

Effective packaging enhances your brand and keeps your product fresh. Choose:

• Food-grade packaging, such as glass jars, bottles, plastic containers, and pouches
• Tamper-proof seals
• Aesthetically pleasing labels with the FSSAI license number, expiration date, etc.
• Environmentally friendly packaging (if aiming for a high-end market)

For fragile products like milk, curd, and paneer, refrigeration is essential for both storage and transportation.

Create Channels of Distribution

You can make sales by:

• Nearby supermarkets and dairy stores
• Department stores and supermarkets
• cafes, hotels, and restaurants (B2B)
• Online marketplaces (such as your direct-to-consumer website, BigBasket, Zepto, or Amazon)
• Delivery to your door through milk subscription applications or WhatsApp requests
• For longer journeys, insulated boxes or refrigerated vans are essential.

How Will You Promote Your Brand?

Create a powerful and trustworthy brand. Pay attention to:

• Hygiene and freshness
• Desi or farm-fresh charm
• A2 or organic, if relevant
• Reasonably priced

Marketing Channels:

• Community sampling or local events
• Social media (YouTube, Facebook, Instagram)
• Partnerships with home cooks or influencers
• Milk subscriptions and loyalty schemes

Maintaining consistency is essential; prompt delivery and excellent flavor will win you devoted clients.

Investment Breakdown

• Plant & Equipment: 8–15 lakhs
• Cold Storage & Vehicles: 5–10 lakhs
• Packaging Materials: 2–3 lakhs
• Raw Materials (milk): 1–2 lakhs/month
• Licenses & Certification: 50,000–1 lakh
• Marketing & Branding: 1–2 lakhs
• Total Initial Setup: ₹20–35 lakhs approx

Key Considerations:

• Perishability of Milk: Dairy products have a limited shelf life, requiring effective production, storage, and delivery.
• Seasonality of Milk Production: The availability and cost of raw materials might be impacted by seasonal variations in milk production.
• Competition: Both local and well-established producers compete in the Indian dairy market.
• Quality Control: Gaining the trust of customers requires constant quality maintenance.
• Logistics and Infrastructure: Effective cold chain management and transportation are critical.

In India, starting a dairy product company isn't a simple fix. However, it may be very fulfilling if you have the correct attitude, quality focus, and a little hustle. You're creating a trustworthy brand every day, not simply selling milk. That has a lot of power. It’s time for you to start with effective planning and strategies.