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Discover the key steps to start a successful dairy farm and secure the necessary financing for growth.
Starting a dairy farm in India is a rewarding venture that taps into the country's growing demand for milk and dairy products. However, it requires careful planning, significant investment, and proper management to ensure success.
The dairy farming industry in India is among the largest in the world, but to thrive in this sector, it is important to have a structured approach to setting up and managing the business. Securing financing is also a critical part of this process to cover the costs of land, livestock, equipment, and operational expenses.
Starting a dairy farm involves several crucial steps that ensure the smooth functioning of the business. Here’s a step-by-step guide:
Before starting a dairy farm, it is important to assess the market demand for dairy products in your area. Understand the consumer preferences for milk, curd, butter, ghee, and other dairy products. Conducting market research will help you determine the scale and type of dairy farm you want to establish.
The success of your dairy farm depends heavily on the breed of cows or buffaloes you choose. You should research and select the breed that is best suited to your farm’s conditions, taking into account factors such as climate, milk yield, and disease resistance. Popular breeds in India include Holstein Friesian, Jersey, and Sahiwal.
Selecting the right location is crucial for your dairy farm's success. Ensure that the location is accessible, has a reliable water supply, and is near a market for selling your products. Additionally, the land should have good pasture for the cattle to graze on, and the climate should be conducive for dairy farming.
You will need several pieces of equipment to run a dairy farm effectively. This includes milking machines, cooling tanks for milk storage, feed grinders, and farm vehicles for transportation. Proper equipment helps streamline operations and improves efficiency.
Dairy farming requires skilled labour for milking, feeding, maintaining hygiene, and animal health management. Hire experienced workers who understand the intricacies of managing dairy cattle and maintaining a clean, healthy environment.
A well-structured business plan is crucial to your farm’s success. Your plan should include detailed financial projections, a marketing strategy, an operational plan, and an analysis of the costs involved. A strong business plan is essential for securing financing from banks or financial institutions.
To operate a dairy farm legally in India, you need to obtain the necessary registrations and licenses:
You need to register with the Food Safety and Standards Authority of India (FSSAI) to ensure compliance with health and safety regulations when producing and selling milk and other dairy products.
If your annual turnover exceeds the prescribed limit, GST registration is necessary.
Depending on your state, you may need to register your farm with the animal husbandry and dairying department for regulatory purposes.
If your farm has a significant waste output, you may need to obtain clearance from the local pollution control board to ensure your farm adheres to environmental standards.
Starting a dairy farm in India involves a mix of infrastructure development, livestock procurement, feed, equipment, and ongoing operational expenses. Costs vary depending on the size of the farm, the number of cows, and the location.
Here’s a breakdown:
| City Tier | Estimated Investment Range | Key Considerations |
|---|---|---|
Tier-1 Cities (e.g., Mumbai, Delhi, Bangalore) |
₹30–80 Lakhs |
Higher land costs, premium equipment, and mechanised dairy farming systems. |
Tier-2 Cities (e.g., Pune, Jaipur, Lucknow) |
₹15–40 Lakhs |
Moderate costs for land and infrastructure; growing demand for organic dairy. |
Tier-3 Cities (e.g., Bhopal, Varanasi, Coimbatore) |
₹8–20 Lakhs |
Lower operational and land costs; ideal for small-scale dairy farms with 10-20 cows. |
Disclaimer: The cost estimates provided are based on industry averages. Actual costs may vary depending on the size of your dairy farm, the number of animals, local conditions, and type of dairy operations. It's advisable to conduct a detailed market survey before finalising the budget.
Land and Location
Land costs vary greatly based on location and size. In Tier-1 cities, land may cost ₹2–5 Lakhs per acre, while in Tier-2 and Tier-3 cities, it can range from ₹50,000–₹2 Lakhs per acre.
Livestock Procurement
High-quality dairy cows typically cost ₹50,000–₹1.5 Lakhs each, depending on breed and milk yield potential. For a small farm, purchasing 10–15 cows would require ₹5–15 Lakhs.
Dairy Equipment
Milking machines, milk storage tanks, chillers, and other equipment can cost ₹2–5 Lakhs for a small to medium-sized farm.
Infrastructure (Sheds, Fencing, etc.)
Construction of sheds, fencing, and storage units can cost ₹5–10 Lakhs, depending on farm size.
Feed and Supplements
Initial stock of feed (fodder, concentrates, supplements) typically costs ₹50,000–₹1 Lakh. Regular monthly expenses for feed will add up to ₹1–2 Lakhs.
Labour and Staff
Hiring farmhands, veterinarians, and skilled workers may cost ₹30,000–₹80,000 per month, depending on the scale of operations.
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Starting a dairy farm can require significant capital investment. Financial planning is critical to understanding your costs and ensuring the long-term sustainability of the business. Securing financing will help cover expenses like purchasing livestock, setting up infrastructure, and buying equipment.
Here are the uses:
Purchase of Livestock
One of the major expenses in starting a dairy farm is purchasing high-quality cows or buffaloes. A business loan can help you cover this cost, allowing you to buy the right breed that will produce high-quality milk.
Farm Infrastructure
Building proper farm infrastructure such as sheds, storage facilities, and milking equipment requires a substantial investment. A loan can help fund these infrastructure needs.
Operational Costs
Running a dairy farm involves regular expenses like feed, veterinary care, and labour costs. A business loan can provide the necessary funds to ensure smooth operations.
Marketing and Distribution
Financing can also help cover marketing expenses to promote your dairy farm and products. Additionally, loans can be used to set up distribution networks and transport for milk delivery.
Access to Capital
A business loan gives you access to the funds needed to start and expand your dairy farm without draining your savings.
Flexible Repayment Terms
Loans come with flexible repayment plans, allowing you to repay based on the revenue your dairy farm generates, thus reducing financial stress.
Tax Deductions
The interest paid on business loans can be claimed as a tax deduction, reducing your overall tax liability.
Refer below table:
| Available Offerings | Starting Interest Rates (p.a.) |
|---|---|
14% p.a. |
|
Aditya Birla Capital UDYOG PLUS Business Loan |
22% p.a. |
16.50% p.a. |
|
18% p.a. |
|
18% p.a. |
|
19.20% p.a. |
|
20% p.a. |
|
24% p.a. |
|
24% p.a. |
|
22% p.a. |
|
22% p.a. |
|
20.50% p.a. |
|
29.50% p.a. |
|
15.50% p.a. |
|
16% p.a. |
Disclaimer: The mentioned rates are subject to change at the lender’s discretion.
Check the following eligibility criteria you'll need to fulfil before applying for a business loan:
Indian citizenship
Age between 21 and 60 years
2+ years of business operation
Good credit score (650+)
Proof of identity (Aadhaar, PAN)
Proof of business (GST registration, business licence)
Bank statements for 6 months
Financial statements (Balance sheet, profit & loss)
Securing a loan for a dairy farm requires demonstrating strong financial credibility, whether as an individual farmer or as a registered entity. Lenders will assess both personal credit scores and Company Credit Reports (CCR) to evaluate repayment capacity and determine loan terms.
If you’re applying for a loan as an individual farmer, your CIBIL score will be assessed. A score of 750 or above is typically preferred by lenders, as it reflects a history of timely debt repayment. A good credit score helps secure funds for purchasing livestock, feed, or equipment, ensuring your dairy farm runs smoothly.
For farms registered as a company (LLP, Pvt Ltd, or partnership), the Company Credit Report (CCR) will be evaluated. A CCR ranking of 1–3 indicates strong financial stability and repayment behaviour. A good CCR score increases the likelihood of obtaining larger loans for expanding farm infrastructure, buying more livestock, or scaling operations.
Maintaining a solid credit profile—whether personal or company-based—ensures timely access to funds for buying high-quality cows, investing in milking machines, or improving farm infrastructure. It also helps in securing better interest rates and flexible repayment terms.
The application process for a business loan on Bajaj Markets is a simple, fast, and digital process. Have a look at the steps below that you can follow to apply online on Bajaj Markets:
Step 1: Click the ‘CHECK ELIGIBILITY’ button available on this page
Step 2: Complete the application form by entering your personal and business information
Step 3: Choose from the available list of lenders
Step 4: Specify your desired loan amount and repayment period
The Indian government provides several schemes for agriculture, animal husbandry, and dairy farming to encourage self-sufficiency, rural development, and economic growth. These schemes offer financial assistance, subsidies, and credit support to help farmers establish and expand dairy farms.
Here are some of the schemes:
| Scheme Name | Scheme Type | Loan Amount / Coverage |
|---|---|---|
National Bank for Agriculture and Rural Development (NABARD), Dairy Entrepreneurship Development Scheme (DEDS) |
Central |
Subsidy support of up to 25%–33% of the project cost for setting up dairy farms and improving animal husbandry practices |
Central |
₹10 Lakhs (urban), ₹5 Lakhs (rural); for setting up dairy farms and food processing units |
|
Central |
Up to ₹10 Lakhs; financing for small dairy enterprises, including equipment and livestock |
|
Dairy Processing and Infrastructure Development Fund (DIDF) |
Central |
₹10,000 Crores for the creation of dairy processing infrastructure, including cold storage, refrigeration, and packaging |
National Dairy Development Board (NDDB) Scheme |
Central |
Financial support for dairy cooperatives, enhancing the milk supply chain and processing units |
Maharashtra State Agriculture and Rural Development Scheme (MSARD) |
State (Maharashtra) |
Loans up to ₹10 Lakhs for establishing and expanding dairy farms |
Karnataka State Dairy Development Scheme |
State (Karnataka) |
Financial assistance for dairy farm infrastructure and livestock, up to ₹50 Lakhs |
Uttarakhand State Animal Husbandry and Dairy Development Scheme |
State (Uttarakhand) |
Subsidies and loans for purchasing dairy cattle and establishing farm infrastructure |
Punjab State Dairy Development Scheme |
State (Punjab) |
Up to ₹25 Lakhs for dairy farm setup and expansion, with a focus on improving milk production quality |
Tamil Nadu State Dairy Development Scheme |
State (Tamil Nadu) |
Financial assistance for small and medium dairy farms to enhance productivity and profitability |
Disclaimer: The loan amounts and scheme details provided above are indicative. Actual eligibility, coverage, and benefits may vary based on the applicant’s profile, location, and government policies. Always check with official government portals or local offices for up-to-date information before applying.
The cost of starting a dairy farm depends on the scale, location, and infrastructure.
Small-scale dairy farm (5-10 cows): ₹3–7 Lakhs
Medium-scale dairy farm (15-30 cows): ₹8–20 Lakhs
Large-scale dairy farm (50+ cows):₹30–80 Lakhs
The major expenses include livestock procurement, land, dairy equipment, infrastructure (sheds, fencing), and feed.
Dairy farming can be profitable with the right management. Key profitability factors include:
Milk Yield: A single cow can yield between 15–30 litres/day.
Operational Costs: Feed, maintenance, veterinary care, and labour.
Average Profit Margin: 15%-30% per litre, depending on milk prices and farm management.
Value-added Products: Selling products like cheese, butter, and curd can significantly boost profits.
With steady milk production and a good local market, dairy farms can break even within 1-2 years.
To run a dairy farm in India, you must obtain several essential licenses and registrations:
FSSAI (Food Safety and Standards Authority of India) Registration – Mandatory for dairy businesses that process and sell milk and milk products.
State Agricultural Department Registration – Depending on the state, you may need registration with local animal husbandry departments.
GST Registration – If your annual turnover exceeds the prescribed limit.
Pollution Control and Fire Safety Licenses – For farms with large-scale operations.
Veterinary Health Certifications –To ensure animal health and milk quality.
No, dairy farming is not tax-free in India. However, certain exemptions and subsidies apply:
GST on Milk: Milk is exempt from GST, but processed dairy products (e.g., cheese, butter) are taxable at 12%.
Income Tax: Income from dairy farming is taxable, but you can claim deductions for expenses such as feed, veterinary care, and equipment.
Subsidies: Government subsidies may reduce operational costs, making dairy farming financially viable.
The land requirement depends on the number of cows and type of farming:
Small-scale farm (5–10 cows): Around 1-2 acres.
Medium-scale farm (15–30 cows): Approximately 3-5 acres.
Large-scale farm (50+ cows): Ideally 10–15 acres for larger herd sizes and fodder cultivation.
Land for grazing, feed cultivation, and building infrastructure is important in determining land size.
For dairy farming, the following government-backed loans are ideal:
PMEGP (Prime Minister’s Employment Generation Programme): Offers subsidies and loans for setting up dairy farms.
MUDRA Yojana: Provides loans up to ₹10 Lakhs for small dairy enterprises.
NABARD’s Dairy Entrepreneurship Development Scheme (DEDS): Offers loans with subsidy support for setting up dairy farming infrastructure and improving animal husbandry practices.
CGTMSE:Collateral-free loans for small-scale dairy farms.
Yes, you can hire professional business consultants or agencies to help create a detailed business plan that will be useful for securing financing and guiding your business.
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