The Indian dairy sector stands today at a pivotal juncture, balancing domestic stability, evolving regulations, and the pressures of a globalized market. Compared to last year, the overall commodity stock position has improved significantly, offering much-needed stability. Milk prices have stabilized at levels favorable for both farmers and consumers, while declining feed and input costs have strengthened farmer margins. Procurement by cooperatives and private players has risen by 5-12 percent, and consumption continues to grow steadily at 2-3 percent annually an encouraging reminder of milk's indispensable role in Indian diets. At the same time, rapid growth in digital commerce, improved distribution networks, and the entry of new brands are expanding consumer choice but also intensifying competition for established players. Yet, amid these positive signs, the most pressing challenge lies in the growing disparity between what consumers pay and what farmers receive. Farmers currently earn only about 65 percent of the retail price, leaving a gap of nearly Rs. 15-20 per litre. This widening imbalance undermines not just economic viability but also the long-term sustainability and fairness of India's dairy model. Addressing it must be a shared priority for policymakers, cooperatives, and private industry to ensure that growth in the sector translates into equitable prosperity.

Adding to this evolving market scenario is the Supreme Court's directive to the Food Safety and Standards Authority of India (FSSAI) to expedite the introduction of Front-of-Pack Nutrition Labelling (FOPNL) on packaged foods, an initiative intended to empower consumers with simple and transparent nutrition information. While the Indian Dairy Association (IDA) welcomes the intent behind this move, dairy products present unique complexities that require nuanced treatment. Milk and its derivatives naturally contain fat, lactose, and sodium- nutrients that could be unfairly flagged under a uniform warning system. Labelling them without context risks misrepresenting the nutritional value of dairy and could inadvertently discourage its consumption, despite dairy being one of the most accessible and affordable sources of high-quality protein, calcium, and micronutrients. IDA therefore urges regulators to adopt a tailored approach that recognizes the intrinsic qualities of milk and milk products. At the same time, we call for wider stakeholder engagement, particularly from farmer-led cooperatives and corporate players and MSMEs, to ensure that the final regulatory framework is practical, fair, and rooted in the realities of the dairy value chain. FSSAI's recent clarification distinguishing genuine dairy products from "analogues"- ensuring that only authentic dairy may use dairy terminology is a welcome move, but it must be backed by stringent enforcement to prevent consumer confusion and protect the integrity of dairy.

It is in this context that paneer deserves special attention. Paneer is not just another dairy item - it is a cultural mainstay, a vital protein source in vegetarian diets, and a product whose demand has grown rapidly in both rural and urban markets. India's paneer market was valued at around INR 648 billion in 2024 and is projected to grow at a compounding annual rate of nearly 13-14 percent, reaching between INR 2,030 and 2,400 billion by 2033-34. This phenomenal growth is being driven by rising health consciousness, the spread of quick service restaurants, innovations such as fortified, flavoured, or ready-to-cook variants, and the expansion of modern retail and e-commerce platforms. Globally, too, paneer is gaining recognition, with the international market estimated at USD 10.8 billion in 2024 and forecast to reach USD 18.5 billion by 2033. Yet, this growth story faces a significant threat from analogue paneer, made using vegetable oils, starches, or other synthetic substitutes but marketed misleadingly as dairy- based paneer. These analogues compromise nutrition, divert demand away from milk, and undermine farmers' incomes by bypassing the dairy supply chain. For consumers, analogue paneer means loss of trust, as they may unknowingly miss out on the natural proteins, fats, and micronutrients that authentic paneer provides. For farmers, it means reduced milk procurement and weakened livelihoods. IDA firmly believes this is an urgent area requiring regulatory vigilance. Strict labelling norms must ensure that only paneer made from milk is allowed to carry the name "paneer," while products using non-dairy substitutes must be clearly differentiated. Consumer education campaigns are equally critical to enable households to identify genuine paneer and make informed choices. Alongside this, cooperatives and private dairies must strengthen branding, adopt certification mechanisms, and invest in secure packaging to reinforce consumer confidence in authenticity. Protecting paneer from the encroachment of analogues is not merely about defending one product but about safeguarding farmer livelihoods, consumer trust, and our cultural heritage.

India's proposed Goods and Services Tax (GST) overhaul - which reportedly reduces levies on essential items including dairy products-is a timely development that promises to ease pressure on both consumers and the backbone of our industry: smallholder dairy farmers. As India's dairy sector navigates tightening margins and rising operational costs, such a move could play a pivotal role in ensuring affordability without compromising producer livelihoods.

For years, IDA has consistently championed the case for fairer taxation on dairy, particularly by highlighting anomalies such as the higher GST on ghee compared to imported palm oil. Despite ghee being a natural, nutrient-rich product produced by millions of Indian dairy farmers, it attracted a 12% tax while palm oil-frequently used to adulterate ghee-was taxed at just 5%. In July 2024, we formally appealed to the Government of India, supported by documentation from the Gujarat Co- operative Milk Marketing Federation (Amul), arguing that aligning ghee's GST with other edible oils would not only benefit consumers and increase demand for genuine dairy but also curb adulteration and reduce tax evasion.

Meanwhile, the global dairy market is witnessing turbulence that cannot be ignored. The August 2025 Global Dairy Commodity Update points to a surge in milk supply across the European Union, the United States, and New Zealand, which is exerting downward pressure on commodity prices. In the U.S., production of milk and cheese has outpaced domestic demand, creating stockpiles. In New Zealand, favourable production conditions are likely to push output even higher than last year's already strong levels. In the EU, earlier tightness in supply has eased, although climatic concerns such as hot, dry summers and disease risks remain. In contrast, Australia faces feed shortages in southern regions, with forecasts pointing a 2 percent decline in milk solids production for 2025-26. This divergence underscores the unevenness nature of global dairy dynamics. While India remains largely insulated due to its strong domestic consumption base, the interconnected nature of commodity trade means we cannot afford complacency. Global oversupply could influence fat-based commodities and indirectly reduce farmer returns if not managed prudently.

The path forward requires balancing multiple imperatives - ensuring farmers receive fair returns, protecting consumers with transparency and safety, safeguarding authenticity against analogues, and preparing for the shocks and opportunities of global markets. The story of Indian dairying has always been one of trust-between the farmer and the consumer, between the organized dairy sector and the household, and between tradition and modernity. That trust is our greatest asset, and it is what we must nurture as we build the next chapter of growth. The Indian Dairy Association remains steadfast in its mission to promote policies that protect farmers, empower consumers, and preserve the integrity of dairy. By uniting around fairness, transparency, innovation, and sustainability, we can ensure that India's dairy sector not only withstands external pressures but also thrives as a driver of livelihoods, nutrition, and cultural identity. The task is not easy, but with resilience and vision, we can continue to uphold dairy as the cornerstone of India's food and economic security.