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April 4, 2024

How to Start a Dairy Farm Business in India?- A Setp to Step Guide

April 4, 2024

Dairy farming is not a new business. It has been there for centuries. It is just passing on from generation to generation. Under this business, animals are raised to produce milk. Animals like a cow, buffalo, or goat. As the demand for milk is almost everywhere in every part of this world, so this business is getting a good pace. 

Earlier the dairy farm business was there, but it is being managed with old traditional techniques. Now with the new advanced techniques, this business is specialized in so many things. 

How to Start a Dairy Farm Business in India

Producing milk is not as easy as it looks, it requires a lot of care and feeding the animals. Also, it is very important to take care of every need of the animal besides your own. 

The most common practice of dairy farming is being performed in rural areas, which run this business to earn a livelihood. But from the last many years, dairy production is being increased in other regions of India. There has been seen a spike in dairy production in India. The dairy farming business is an important part of our economy just like the agriculture.

If you want to be the one to add value to the economy of our country, then read this whole article to know how you can start a dairy farming business in India

The Market Of The Dairy Farm Business in India

The Indian dairy industry is a powerhouse, valued at ₹26.11 billion USD and projected to grow at over 6% annually. As the world’s largest milk producer, India boasts a massive domestic market fueled by rising incomes and health consciousness.

Strengths include a large and growing population, strong milk production, and government support. However, challenges include a significant informal sector, infrastructure gaps, and price volatility.

Investment opportunities lie in modern processing facilities, cold chain infrastructure, and value-added products like cheese and yogurt. The Indian dairy market offers exciting potential for those ready to address challenges and capitalize on trends.

The Legal Requirement Needed for a Dairy Business In India

How to Start a Dairy Farm Business in India

The legal requirements for a dairy business in India can vary depending on the size and nature of your operation. Here’s a breakdown of the general framework:


  • FSSAI Registration: This is mandatory for all food businesses in India, including dairy businesses. The FSSAI (Food Safety and Standards Authority of India) categorizes businesses based on annual turnover. If your turnover is below 12 lakhs (₹1.2 million), a basic FSSAI registration is sufficient. Higher turnovers may require a state or central license.
  • Local Veterinary Department: Register your dairy farm with the local veterinary department or animal husbandry department in your area. They can guide animal welfare regulations and best practices.

Licenses and Permits:

  • Municipal Corporation/Panchayat License: Depending on your location, you might need a license from the local Municipal Corporation or Panchayat (village council) to operate a dairy business.
  • Pollution Control Board (For Large Farms): If you manage a large-scale dairy farm, you may require permission from the State Pollution Control Board (SPCB) to manage waste disposal and adhere to environmental regulations.

Additional Considerations:

  • Trade License: In some cases, you may need a trade license from your local authorities to operate your business.
  • GST Registration: If your turnover exceeds the threshold set by the government, you’ll need to register for Goods and Services Tax (GST).

Remember: It’s advisable to consult with a local lawyer or business consultant to determine the exact legal requirements applicable to your specific dairy business model and location. They can guide you through the application process and ensure you comply with all necessary regulations.

How To Start a Dairy Business step-by-step guide

How to Start a Dairy Farm Business in India

1. Craft a Solid Business Plan:

  • Market Research: Investigate what dairy products are popular in your region. Talk to local grocers, farmers markets, and even potential customers to understand buying habits and identify any unmet needs. This intel will help you understand the type of dairy products you produce and how you market them.
  • Decide on Your Production Model: Choose between owning a herd and raising your cattle or establishing relationships with reliable dairy farms to purchase milk in bulk. Consider factors like land availability, initial investment costs, and your long-term vision for the business.

2. Secure the Legal and Operational Framework:

  • Business Structure: Select a legal structure for your business, such as a sole proprietorship, partnership, or Limited Liability Company (LLC). Each offers varying degrees of liability protection and tax implications. Consult a lawyer or accountant to determine the best fit for your situation.
  • Permits and Licenses: Research and obtain the necessary permits and licenses to operate in your area. These may involve health inspections, food safety certifications, and business licenses from your local or state government.

3. Gear Up for Production and Processing:

  • Source Milk (if not raising cows): Establish reliable partnerships with dairy farms that align with your quality standards and production needs. Negotiate contracts that ensure a consistent supply of fresh milk.
  • Equipment Acquisition: Invest in essential processing equipment based on your chosen products. Depending on your chosen product line, this might include milk coolers, pasteurizers, homogenizers, butter churns, or cheese vats. Prioritize high-quality equipment that meets safety standards and aligns with your production volume.

4. Develop a Production and Marketing Strategy:

  • Safe and Sanitary Production: Establish a meticulous hygiene protocol for your production facility. This includes following food safety guidelines to prevent contamination and ensure the highest quality of products.
  • Develop a Brand Identity: Create a memorable brand name and logo that reflects your dairy business’s values and resonates with your target market.

5. Sell Your Delicious Dairy Products:

  • Distribution Channels: Identify where you’ll sell your dairy products. Consider local stores, restaurants, farmers markets, or establishing your online presence. Explore the possibility of direct sales to consumers through a subscription model or a physical storefront.
  • Marketing and Sales Strategy: Develop a marketing strategy to showcase your brand and products. Utilize social media, local advertising, or partnerships with complementary businesses to reach your target audience.

Remember: Stay ahead of the curve by continuously learning from established dairy businesses and industry trends. Consider attending industry conferences, workshops, or online courses to stay updated on best practices and innovative technologies within the dairy sector.

Benefits of the dairy business in India

The Indian dairy business thrives due to several factors. High demand from a growing population creates a lucrative market. Government initiatives support infrastructure, cattle breeds, and farmers. Dairying provides crucial income for millions in rural areas, especially during challenging times. It bolsters food security by ensuring access to essential nutrients. Beyond milk, cow dung generates fertilizer income and fosters sustainable practices. The industry creates opportunities for businesses in cattle feed, veterinary services, and equipment. Overall, the dairy business is a significant contributor to India’s economy and well-being.

Is the Dairy Business Profitable?

  • Strong Market Demand: Fueled by a population exceeding 1.4 billion and a rising middle class, India boasts the world’s largest milk consumption rate at around 190 liters per capita per year. This translates to a constantly expanding market for dairy products, making it a lucrative space for businesses.
  • Government Support: The Indian government actively supports the dairy sector with initiatives like the National Dairy Development Board (NDDB). The NDDB invests in infrastructure development, promotes improved cattle breeds, and provides financial aid to farmers. This government backing creates a more stable environment for dairy businesses to operate in.
  • Potential for High Profits: While the sale of raw milk provides a steady income, the real profit potential lies in value-added products. The market for cheese, yogurt, and flavored milkshakes is experiencing explosive growth, with a projected CAGR of 18.2% for yogurt alone. Businesses focusing on these higher-margin products can tap into significant profit opportunities.

Limitations of the dairy business in India

  • Competition is Tough: The Indian dairy market is a crowded space, with established national brands and a large, informal sector vying for market share. This necessitates efficient operations and a strong brand identity to differentiate yourself.
  • Profitability Relies on Management: Success hinges on effective farm management practices. Controlling costs like cattle feed, minimizing milk spoilage through proper storage and transportation, and maximizing milk yield are crucial for profitability.
  • Price Fluctuations are a Reality: Milk prices can fluctuate due to seasonal variations in production and disruptions in the supply chain. Strategic planning and exploring options like contract farming can help mitigate the impact of these fluctuations.

Also Read: How to Start a Bakery Business

How to Select the Best Breed for your Dairy Business

How to Start a Dairy Farm Business in India

Picking the perfect dairy cow breed in India depends on your location and goals. Here’s what matters:

  • Climate: Hot and humid? Choose heat-resistant breeds like Sahiwal. Cooler climate? Consider high-yielding Holstein Friesian.
  • Milk Production: Focus on high-yielders like Holstein Friesian or Jersey if that’s your priority, but be prepared for more management needs.
  • Milk Composition: Want high-fat milk for ghee? Look at Gir or Tharparkar. Balanced fat-protein content? Red Sindhi or Rathi are good options.

Popular Breeds:

  • Sahiwal: Heat-tolerant, good yield, disease-resistant – great for beginners.
  • Gir: High-fat milk, good for ghee production.
  • Red Sindhi: Good yield, balanced fat protein, shorter calving intervals.
  • Rathi: Heat-tolerant, decent yield, beginner-friendly.

Requirements of Dairy farm business

When you start a business, you always find yourself confused with the requirements of the business. And as you know, requirements vary from business to business. You cannot use the same set of requirements for every kind of business. So, here I am listing the requirements of the dairy farm business;

  1. A piece of Land– The first and the most important thing you need while starting this business is Land. Without land, you cannot perform the activities you require to do to run this business. The area of land depends on the number of animals you have. Also, you require land to grow green fodder for your animals, because that’s what they going to eat.

  2. A shed– Before you start doing this business, you must have a place where the animals will live that will be called a shed. A shed will be a place where animals will normally be seated and rest which is fully ventilated with a good drainage facility. 

  3. A lot of water– As you know, water is the necessity of life without water we cannot think of any life on earth. So, to start this business you are going to need a lot of water for proper drainage, for animals to drink, bathe, and to grow crops or fodder in the field for animals. You must make sure that you have a proper water supply to run this business.

  4. A fodder– Fodder in simple words is the food of your domestic animals. When you are starting this business, you must make sure that you feed them enough food. With having enough and healthy food they will yield a good amount of milk. So, fodder management is necessary for feeding them on daily basis.

  5. Selection of Breed– When you are going to start this business, you also have to select a breed that yields a good amount of milk. So, selecting the right breed becomes important for your business to grow. 

  6. A few laborers– You cannot deny the fact that you are going to hire a few laborers to help you run this business. You cannot run this business on your own, you need to hire people who are good at handling the dairy farm.

  7. Vaccinate the animals– If you want your cattle to be disease-free, you need to vaccinate your animals with a proper vaccination schedule. For this, you will need the help of a veterinary doctor. This is the right way to keep your animal’s diseases free. 

Also Read: Small Business Ideas in India


After reading this blog, you must be having a lot of questions which you will be going to find in the form of FAQ below. Besides this, you must get an idea of how you can start a dairy farm business.

Everything has been written in a precise manner to make you completely understand how it goes. There is nothing to worry about starting a dairy farm business, even it can be the best choice because this business is very profitable. If you stuck somewhere, you could check this blog on the website of Traffic Tail

Frequently Asked Questions

Q1. What is the dairy farm business?

Ans. Dairy farm business refers to the type of agriculture business which involves in the production of milk from dairy animals which are cows, buffalo, or goat. A dairy farm is a place where these domestic animals are being taken care of and use to produce milk. It is one of the parts of agriculture. 

Q2. Is a dairy farm business profitable?

Ans. Yes, the dairy farm business is profitable. Only if you learn the ways to make great profits out of it. As you know, the demand for milk and milk-related products is very high. They are in demand irrespective of the price which is the plus point of this business. Also, these products are used in everything which adds to their demand more. 

Q3. What are the benefits of the Dairy farm business?

There are numerous benefits of dairy farm business which are written below; 

  1. Less Investment
  2. Eco-friendly
  3. Unskilled labor
  4. Business opportunities
  5. Continuous demand

Q4. What are the difficulties faced by the dairy farm business?

Ans. Everything has its problems which you must tackle while running a business. So, here is the list of a few of them;

  1. No proper calculation
  2. Lack of management
  3. Perishable product

Q5. What do I require to start the dairy farm business?

Ans. Every business has its requirements, and we are here to help you with your confusion. Here is the list of things you require to start a dairy farm product.

  1. A piece of land
  2. A shed
  3. A lot of water
  4. A Fodder
  5. Selection of breed
  6. A few labours
  7. Vaccination to animals 

These are the major requirements that you cannot compromise. Besides this, you may need a few more things which you will get to know with time. 

Q6. How can I start my dairy farm business in India?

Ans. Here is the short and crisp guide with steps to follow for starting your dairy farm business;

  1. Learn about the dairy farm business
  2. Make a decision plan
  3. Research about the market
  4. Decide the breed
  5. Choose a house
  6. Feed good food
  7. Care and management of the cattle
  8. Plan investment and cost
  9. Registration of business
  10. Make a website

Q7. How can I market my dairy farm business?

Marketing is the base of a business. If you want to make a strong business base, you have to focus on the marketing of your business. You can do marketing in the following ways;

  1. Promotion
  2. Advertising
  3. Online marketing

These are the most common ways of marketing your business among your customers. 

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