What does the Indian Dairy Industry has to Offer to Foreign Investors?

India is a land of opportunity for investors looking for new and expanding markets. Dairy food processing holds immense potential for high returns. Growth prospects in the dairy food sector are termed healthy, according to various studies on the subject.

The basic infrastructural elements for a successful enterprise are in place.

• Key elements of free market system
• raw material (milk) availability
• an established infrastructure of technology
• supporting manpower

An entrepreneur's participation is likely to provide attractive returns on the investment in a fast growing market such as India, along with an export potential in the Middle East, Singapore, Malaysia, Indonesia, Korea, Thailand, Hong Kong and other countries in the region.

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Among several areas of potential participation by NRIs and foreign investors, the following list outlines a few promising opportunities:

Biotechnology:

• Dairy cattle breeding of the finest buffaloes and hybrid cows
• Milk yield increase with recombinant somatotropin
• Recombinant chymosin, acceptable to vegetarian consumers
• Dairy cultures, probiotics, dairy biologics, enzymes and coloring materials for food processing
• Fermentation derived foods and industrial products alcohol, citric acid, lysine, flavor preparations, etc.
• Biopreservative ingredients based on dairy fermentation, viz., Nisin, pediococcin, acidophilin, bulgarican contained in dairy powders.

Dairy/food processing equipment:

Potential exists for manufacturing and marketing of cost competitive food processing machinery of world-class quality.

Food packaging equipment:

Opportunities lie in the manufacturing of  both machinery and packaging materials that help develop brand loyalty and a clear edge in the marketing of dairy foods.

Distribution channels:

For refrigerated and frozen food distribution, a world class cold chain would help in providing quality assurance to the consumers around the region.

Retailing:

There is scope for standardizing and upgrading food retailing in major metropolitan cities to meet the shopping needs of a vast middle class. This area includes grocery stores of European and North American quality, warehousing and distribution.

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Product development:

• Dairy foods can be manufactured and packaged for export to countries where Indian food enjoys basic acceptance.  The manufacturing may be carried out in contract plants in India. An option to market the products in collaboration with local establishments or entrepreneurs can also be explored. Products exhibiting potential include typical indigenous dairy foods either not available in foreign countries or products whose authenticity may be questionable. Gulabjamuns, Burfi, Peda, Rasagollas, and a host of other Indian sweets have good business prospects.
• Products typically foreign to India but indigenous to other countries could also be developed for export. Such products can be manufactured in retail package sizes and could be produced from milk of sheep, goats and camel. Certain products are characteristically produced from milk of a particular species. For example, Feta cheese is used in significant tonnage, in Iran. Sheep milk is traditionally used for authentic Feta cheese. Accordingly, India's goat and sheep herds can be utilized for the manufacture of such authentic products.

Ingredient manufacture:

Export markets for commodities like dry milk, condensed milk, ghee and certain cheese varieties are well established. These items are utilized as ingredients in foreign countries. These markets can be expanded to include value-added ingredients like aseptically packaged cheese sauce and dehydrated cheese powders.

• Cheese sauce: Canned cheese sauce is made from real cheese to which milk, whey, modified food starch, vegetable oil, colorings and spices may be added. Cheese sauce is useful in kitchens for the preparation of omelet, sandwiches, entrees, and soups. In addition, cheese sauce is used as a topping on potatoes and vegetables and may be incorporated in pasta dishes.
• Cheese powders: Cheese powders are formulated for dusting or smearing of popular snacks like potato chips, crackers, etc. They impart flavor and may be blended with spices.

With the globalization of food items, an opportunity should open up for food service and institutional markets.

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Technology-driven manufacturing units:

These plants would fulfil an essential need by providing a centralized and specialized facility for hire by the units which cannot justify capital investment but do need such services. Potential areas for state-of-the-art contract-pack units may conceivably specialize in cheese slicing, or dicing line, cheese packaging, butter printing, and aseptic packaged fluid products.

Training centers for continuing education:

NRIs could set up technology transfer and updating centers for conducting seminars and workshops - catering to the needs of workers at all levels of the dairy industry. Here technical, marketing and management topics can be offered to ensure that the manpower continues to acquire the latest know-how of their respective fields.

The entrepreneurs need powerful tools to implement their plans. Appropriate investment and involvement by NRIs can serve as a catalyst for India's dairy food industry leading to exploration of business potential in domestic and export trade. Risk factors must be identified and managed by in-depth study of chosen areas so that chances of rewards are maximized under the current liberalization climate.

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