Australia’s dairy industry seeks to tap rising demand in India

Australia's dairy industry is pushing the federal government for a free trade agreement (FTA) with India so as to access the country's lucrative market, which is growing fast. Australia could benefit from this rising milk demand in India.

India currently produces 135 million litres of milk, which accounts for 15 per cent of global milk production, but the country is now facing a challenge of rising demand in the near term.

India's high import tariff, however, is an impediment for Australian dairy exporters to trade with this country and an FTA would help improve access to the country's huge market.

With import tariffs in India ranging from 30 to 60 per cent, Australian dairy industry sees little chance of selling its products in the country.

An FTA could help reduce tariff levels and Australian dairy exporters are putting pressure on the federal government for greater access to the lucrative market in India, currently the world's largest milk producer.

Australian agriculture service provider Cargill has estimated that India's demand for milk and milk products was growing at an annual rate of seven per cent while production was rising by four per cent.

India, which currently exports dairy products, could become a net importer of milk products id production continues to lag behind demand, according to Cargill.

Cargill expects India to become a net importer of dairy products by 2020.

According to Australian Dairy, the apex body of the country's dairy industry, a free trade agreement with India with concessions around dairy tariffs "would definitely be a start".

Access to India's market remains a challenge for Australian exporters, according to Peter Myers, Dairy Australia's International Trade Development manager.

"Australia became a complementary supplier into India, not competing with the traditional market," AAP quoted him as saying.

Australian dairy product exports to India were limited to just $1.2 million in 2013-14. Australian diary exporters are targeting India's growing middle class set to reach 200 million by 2020, from about 70 million.

As India becomes more sophisticated, with its rising middle class and more women entering or returning to work can spur growth in demand for milk products.