India’s dairy industry stands as a critical pillar of its economy, employing over 80 million rural households and contributing significantly to rural livelihoods. As the world’s largest milk producer, India accounts for approximately 24 per cent of global milk production, with a recorded output of 219.9 million tonnes in 2021, growing at a CAGR of 4.6 per cent since 2014. Yet, beyond its impressive scale, the sector is undergoing a transformation marked by the rise of D2C dairy brands—a development reshaping not only consumer habits but also the welfare of dairy farmers.

The rise of D2C in Indian dairy

The shift towards D2C channels has been driven by changing consumer preferences for freshness, transparency, and convenience. Unlike traditional retail systems, D2C models enable dairy brands to bypass intermediaries, fostering a direct connection with consumers. As of 2022, India’s D2C dairy market was valued at ₹1,500 crore, with rapid expansion fueled by digital platforms, doorstep delivery, and innovative branding. This evolution offers tremendous potential for empowering farmers by improving their income through fairer pricing mechanisms.

Farmer Welfare: The core of dairy evolution

At the heart of this transformation lies the welfare of India’s dairy farmers. Initiatives such as the National Dairy Plan (NDP) have focused on enhancing milk productivity, upgrading genetic resources, and improving dairy infrastructure. By addressing key challenges such as low productivity and inadequate access to markets, the NDP and earlier programs like Operation Flood have played a pivotal role in elevating smallholder farmers’ incomes. Emerging technologies further bolster these efforts. Precision livestock farming, automated milking systems, and IoT-enabled farm management tools enable data-driven decision-making at the farm level. These innovations improve productivity and ensure better health and welfare for livestock. Blockchain solutions, meanwhile, offer transparency across the supply chain, allowing farmers to authenticate their produce and command premium pricing.

The role of ethical sourcing and sustainability

Consumer awareness around ethical sourcing has grown substantially. Dairy brands are increasingly adopting practices prioritising animal welfare and minimising environmental impact. Sustainable practices, such as optimised feed usage and eco-friendly packaging, are becoming industry norms. Many D2C brands highlight these efforts in their marketing, leveraging transparency as a competitive advantage.

Government and corporate synergy

The Indian government has supported these changes through policies like Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), which provides financial assistance to small and marginal farmers. Corporate entities, too, have contributed by establishing farmer collectives, improving access to technology, and ensuring fair pricing models. The synergy between the public and private sectors has significantly amplified the scope of benefits for farmers. Most dairy brands work closely with farmers to build their capacity and provide them with the necessary support. However, we must reevaluate to see if what’s being done is enough. It is important for brands to create conducive ecosystems that will promote ethical dairying.

Challenges and future pathways

Despite these advancements, challenges persist. Price volatility, the absence of comprehensive and affordable cold chain infrastructure, and the need for farmers to enhance their skills hinder growth. Addressing these gaps requires further investment in rural infrastructure and robust training programmes.

More importantly, the onus lies on emerging clean-label dairy brands to educate the customers. Transparency is the key; if the value chain and contribution at each level are known to customers, they will come on board as partners rather than merely consumers. Several city-dwelling customers today spend weekends at farms trying to get a first-hand feel of farming and understand how they can contribute,

The future of Indian dairy lies in an integrated approach that leverages technology, ethical practices, and strong policy support. By prioritising farmer welfare as a central tenet, D2C brands can contribute to industry growth and the socio-economic development of rural India.

The author is Chief Growth Officer (CGO), Sid’s Farm

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