With domestic production of milk and dairy products in China not being able to meet the rising demand, India can step in to capture this fast growing market, a Confederation of Indian Industry report said.
The report 'Export potential of Indian dairy products to China' said in the next five years, the consumption of dairy products in China would grow by 15 per cent annually and India, which is already the world's largest producer, has the potential to tap this opportunity.
China's annual current production is about 10 million tonnes and is supplemented by substantial imports to meet the domestic demand, the report said. The country imported 2.88 lakh tonnes of dairy products worth $318 million dollar in 2003, it added.
India, which produces 13 per cent of world's total output and 57 per cent of Asia's total production, can raise milk production to meet this demand. Output is growing at 4 per cent per annum and by 2010 the projected output in India is 115 million tonnes, CII said.
The report noted that though dairy products consumption in China increased by 10 per cent per year in the last three years, per capita dairy consumption in 2001 remained at 7-9 kg as against the world average of 105 kg.
With a reduction in tariffs, foreign companies would play a major role in China's dairy industry, it said.
Further, the domestic dairy industry in China was in a nascent stage dominated by small-scale units with low technology and production level. Indian enterprises with their expertise in this sector could easily tap the Chinese market.
There are more than 1,500 milk product enterprises in China with an annual output of about eight million tonnes, the report said. Of these, 90 per cent of the units have a daily output of less than 100 tonnes, and only 12 enterprises have an annual sales volume of more than $12 million.
China also plans to introduce a milk scheme for school children, the report said, adding a large portion of the increased demand would have to be met with imports.