Union Budget 2026: Dairy sector expects further GST rationalisation, infrastructure upgradation and more

Its total milk production grew 3.58% year-on-year (YoY) to an estimated 247.87 million tonnes during 2024-25, compared to 239.30 million tonnes it logged in 2023-24.

Furthermore, dairy is the largest agricultural product in India, contributing 5% to the national economy and directly employing more than 8 crore farmers.

“The dairy sector is a cornerstone of India’s food security and rural economy, directly supporting millions of farmers and allied livelihoods,” said Dr. K. Rathnam, Whole Time Director & CEO, Milky Mist Dairy Food Ltd., adding that the Union Budget 2026 presents a timely opportunity to “accelerate the next phase of growth for this vital sector.”

He stated that overall, the industry expects a balanced and forward-looking Budget that would strengthen farmer incomes, upgrade infrastructure, and enable organised dairy players to scale sustainably.

Rathnam added that it would “create long-term value for the sector and reinforce India’s position as one of the world’s leading dairy economies.”

Key expectations for Budget 2026

• Rathnam stated that the sector will welcome the government’s continued support on the GST front, and added that there is a scope for further rationalisation of key inputs such as packaging materials, refrigeration equipment, animal feed, and veterinary services. He added that GST rationalisation on this front would go a long way in easing rising cost pressures and improving overall efficiency across the value chain.

• He said that the industry expects a strong policy push towards strengthening cold-chain infrastructure, adding that it is critical.

• Rathnam highlighted that enhanced capital subsidies, interest subvention schemes and easier access to long-term credit will help bridge the existing infrastructure gaps, reduce wastage and improve milk quality, especially in hinterland regions.

• He highlighted that incentives for both dairy companies and farmers would be equally important, stating that initiatives focused on productivity enhancements, fodder development, animal health, affordable cattle insurance and cold-chain logistics could significantly improve farmer incomes while ensuring consistency in supply.

• “From an industry standpoint, incentives for value-added dairy products, automation, advanced quality-testing laboratories and sustainability initiatives will encourage private players to invest in modern, scalable capacity aligned with global standards,” Dr. K. Rathnam said.

• According to an EY report, it expects promotions of dairy, fisheries, and livestock sectors for income diversification.

Dairy sector allocations in Budget 2025

In the Union Budget 2025-26, the government allocated ₹7,544 crore to the Ministry of Fisheries, Animal Husbandry, and Dairying, which constituted about 0.15% of the total government expenditure, according to the Indian Dairy Association.

More specifically, the Department of Animal Husbandry and Dairying received an allocation of ₹4,840.40 crore, in comparison to ₹4,521.24 crore in Budget 2024.

The government allocated ₹1,790 crore towards the National Programme for Dairy Development (NPDD). Furthermore, it allocated ₹460 crore towards the infrastructure development fund.