India holds the title of the world’s largest milk producer, thanks to its vast population of cows and buffaloes. Since Independence, the dairy sector has grown steadily at about 3% annually. Livestock contributes roughly 4.11% to India’s GDP and 25.6% to agricultural GDP, with rural small-scale farmers supplying nearly 62% of the nation’s milk.
Milk is India’s second-largest agricultural commodity after rice. Rapid urbanization, population growth, and rising demand for milk and milk products are driving the sector’s continuous expansion — making dairy farming an attractive year-round business.
This guide covers the basics of starting a dairy farm, investment needs, profitability, and government schemes that can support new entrepreneurs.
Starting a Dairy Farming Business in India
If you’re planning to step into dairy farming, here are key steps to consider:
Create a Business Plan – Outline your goals, strategies, operational methods, and financial projections.
Research the Market – Understand local demand for milk and dairy products, as well as potential competitors.
Secure Land – One acre can generally support feed production for 7–10 cows.
Choose the Right Breed – Select high-yielding breeds. Cow’s milk has less fat than buffalo’s milk; buffalo milk is ideal for making butter and ghee. Ensure proper vaccination.
Build a Shed – Provide a covered space to protect cattle from harsh weather.
Provide Nutritious Feed – Healthy cattle require a steady supply of quality fodder.
Complete Legal Formalities – Obtain necessary licenses and permits. NABARD offers up to 33% subsidy under the Dairy Entrepreneurship Development Scheme (DEDS).
Arrange Initial Funding – Bank loans can help cover setup costs.
Plan Your Marketing Strategy – Build customer trust and promote your products.
Investment Requirements
The cost of setting up a dairy farm varies by location, scale, and breed. A small rural farm can be started with ₹10–20 lakh.
Approximate Cost Breakdown:
Land: ₹1,00,000 – ₹10,00,000 per acre
Cattle Shed: ₹50,000 – ₹1,50,000 (depends on capacity)
Cows:
Sahiwal: ₹60,000 – ₹75,000
Gir: ₹30,000 – ₹2,00,000
Holstein Friesian: ~₹1.5 lakh
Jersey: ₹40,000 – ₹60,000
Medicines & Vaccinations: ~₹10,000 annually
Feed Costs: ~₹40,000 annually
NABARD offers a 33.33% subsidy for loans up to ₹7 lakh under DEDS.
Profit Potential
Dairy farming can be highly profitable due to:
Constant demand for milk and dairy products
Lower investment compared to some other agricultural businesses
With 10 cows, a farmer can earn between ₹8,000 and ₹1 lakh per month, with daily profits of ₹750–₹1,000 after feed costs. Quality milk fetches better prices, improving profit margins.
Government support, such as initiatives from the National Dairy Development Board (NDDB), further strengthens the industry through better infrastructure, breed improvement, and financial assistance to small farmers.
Key Government Schemes for Dairy Farmers
Rashtriya Gokul Mission (2014–2026, ₹2400 crore budget)
Promotes and preserves indigenous cattle breeds.
Aims to boost milk productivity and farmer profitability.
Dairy Infrastructure Development Scheme (DIDS) (₹11,184 crore)
Upgrades milk processing and chilling plants.
Installs milk adulteration testing equipment at the village level.
National Programme for Dairy Development (NPDD)
Improves milk quality and expands organized milk procurement.
Includes infrastructure upgrades and financial aid for market linkages.
Final Word
Dairy farming in India offers stable income and high demand year-round. For small and marginal farmers with land, basic resources, and knowledge, it can be one of the most rewarding ventures. With relatively low marketing costs and strong government support, starting a dairy farm today can lead to steady profits for years to come.
Dairy Farming in India: A Complete Guide to a Profitable Business
India is the largest milk-producing nation in the world, thanks to its vast cattle population and long tradition of animal husbandry. Since Independence, the dairy sector has grown rapidly at a rate of around 3% annually, contributing significantly to the economy:
4.11% to the national GDP
25.6% to agricultural GDP
Nearly 62% of the total milk supply comes from rural small-scale dairy farmers
Milk is now the second largest agricultural commodity after rice. With a growing population, urbanization, and increasing demand for milk and dairy products, dairy farming has become one of the most promising agribusiness opportunities in India.
This comprehensive guide will walk you through:
The current scenario of dairy farming in India
Step-by-step process of starting a dairy farm
Cost and investment requirements
Profit potential and income estimates
Government schemes that support dairy farmers
1. Why Dairy Farming in India is Thriving
Several factors make dairy farming a sustainable and profitable business:
High Demand – Milk is a staple in Indian households, consumed daily in multiple forms (tea, coffee, curd, paneer, ghee, butter).
Year-round Opportunity – Unlike seasonal crops, dairy farming generates consistent income throughout the year.
Government Support – Multiple subsidy schemes and financial aids encourage farmers to start and expand dairy businesses.
Cultural Importance – Milk and milk products are deeply integrated into Indian cuisine, traditions, and festivals.
2. Steps to Start a Dairy Farming Business in India
Step 1: Prepare a Business Plan
Before investing, create a detailed plan outlining:
Your goals and production targets
Financial projections and break-even analysis
Marketing and distribution strategy
Risk management plan
Step 2: Conduct Market Research
Study your local market to determine:
Demand for milk and dairy products
Existing competitors and their pricing
Potential customer base (households, hotels, restaurants, sweet shops, etc.)
Step 3: Arrange Land
Land is essential for cattle shelter and fodder cultivation.
Rule of thumb: 1 acre can grow enough feed for 7–10 cows.
Proximity to the market and water sources is important.
Step 4: Choose the Right Cattle Breed
High Milk Yielding Breeds:
Cows: Sahiwal, Gir, Holstein Friesian (HF), Jersey
Buffaloes: Murrah, Mehsana
Milk Quality Considerations:
Cow’s milk: Lower fat content, good for drinking
Buffalo milk: Higher fat content, ideal for butter, ghee, and paneer
Ensure proper vaccinations and health checks before purchase.
Step 5: Build a Shed
Protects cattle from heat, rain, and cold
Should have proper ventilation, drainage, and easy cleaning facilities
Space requirement: Around 40–50 sq. ft per animal
Step 6: Provide Quality Feed
Balanced diet of green fodder, dry fodder, and concentrates
Regular supply of clean drinking water
Nutritional supplements to boost milk yield
Step 7: Complete Legal and Financial Formalities
Obtain necessary licenses and permits (varies by state)
Register with local authorities if required
Apply for a NABARD dairy loan – subsidies of up to 33% are available under the Dairy Entrepreneurship Development Scheme (DEDS)
Step 8: Marketing Strategy
Sell directly to households for higher margins
Partner with local milk collection centers, hotels, and restaurants
Consider producing value-added products like paneer, yogurt, and ghee
3. Cost of Setting Up a Dairy Farm in India
The investment depends on location, scale, and breed, but here’s a general estimate for a small-scale farm:
| Expense | Approximate Cost |
|---|---|
| Land (per acre) | ₹1,00,000 – ₹10,00,000 |
| Cattle Shed | ₹50,000 – ₹1,50,000 |
| Purchase of Cows | ₹40,000 – ₹2,00,000 per animal |
| Medicines & Vaccinations | ₹10,000 annually |
| Feed Costs | ₹40,000 annually |
| Miscellaneous (equipment, water supply, labor) | ₹50,000 – ₹1,00,000 |
Total Initial Investment: ₹10–20 lakh for a rural small-scale farm
NABARD subsidies can cover 33.33% of loans up to ₹7 lakh.
4. Profitability and Earnings
On average:
10 cows can produce significant monthly income.
After deducting feed costs, farmers can earn ₹750–₹1,000 per day.
Monthly income can range from ₹8,000 to ₹1 lakh, depending on milk yield, selling price, and marketing method.
Factors affecting profit margins:
Breed and milk yield per cow
Quality and freshness of milk
Direct vs. wholesale selling
Value-added product sales
5. Government Schemes Supporting Dairy Farmers
a) Rashtriya Gokul Mission (2014–2026, ₹2400 crore)
Promotes and preserves indigenous cattle breeds
Aims to boost milk productivity and farmer profitability
b) Dairy Infrastructure Development Scheme (DIDS, ₹11,184 crore)
Upgrades milk processing and chilling plants
Introduces milk adulteration testing at village level
c) National Programme for Dairy Development (NPDD)
Improves milk quality and expands organized milk procurement
Provides infrastructure upgrades and financial aid for market linkages
6. Conclusion
Dairy farming in India is more than just a business — it’s a pillar of rural livelihood and a crucial part of the nation’s agricultural economy. With year-round demand, government support, and relatively low entry barriers, it offers an excellent opportunity for both small and large farmers.
By choosing the right breed, maintaining cattle health, and applying smart marketing strategies, dairy farmers can achieve steady income and long-term growth.