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Dairy sector set to touch $140 billion by 2020: Report

MUMBAI: The size of Indian dairy industry in both organised and unorganised sectors is expected to double to $ 140 billion by 2020, on the back of growing demand and rising disposable income. 

"The Indian dairy industry, currently pegged at $ 70 billion (organised and unorganised), is expected to double by 2020," a report by
Investor Relations Society (IRS) said. The society is a global network of investor relations professionals. 

"On the back of a rise in disposable income and strong demand for dairy products, the Indian dairy industry is all set to experience high growth rates in the next 5-6 years." the report said. 

While the dairy industry is growing at a compounded annual growth rate ( 
CAGR) of 15-17 per cent, the value-added products alone are growing way beyond 24 per cent, it said. 

Milk is the country's biggest agricultural produce, contributing 22 per cent to agricultural GDP. India overtook the US in 1998 to become the world's leading milk producer, accounting for over 15 per cent of the global output, it said. 

The industry, which had been a national heritage, is now re-emerging and catching the eye of investors due to its growth potential, it added. 

Growth in financials of existing domestic players, diversification into dairy sector by other companies, surge in 
private equity deals, entry of foreign firms in the segment are some of the broad indications that India's organised dairy industry will remain on growth path at least till 2020, the report said. 

"The operating margins in value-added products are almost 2x liquid milk business, thanks to changing consumption pattern due to rapid urbanisation," IRS 
Chief Executive OfficerKailash Nichani said. 

The milk production alone is expected to cross 200 million tonnes by 2016 from the current 125 million tonnes. 

The government, too, appears to have realised the potential in this industry and has come up with some proactive measures to guide investors interested in setting up food processing units in different parts of India, the report said. 

The dairy sector has been liberalised in a phased manner since 1991. Many private players entered the market to set up processing facilities in areas with surplus milk.