Organised dairy players to gain from recent PLI scheme: Report

According to a report, the new production-linked incentive (PLI) plan will benefit organised players in the dairy industry, with value-added products (VADP) anticipated to stimulate extra investments of around Rs 500(US$ 65 million) - 600 crore (US$ 78 million).

According to ICRA, the government's newly announced production-linked incentive (PLI) programme for the food processing industry, which involves a total investment of Rs 10,900 crore, will boost the domestic dairy sector, particularly value-added products (VADPs) like mozzarella cheese and ready-to-consume product categories.

For the first four years, the plan gives incentives based on sales growth based on investment made by enterprises between FY22 and FY27, with FY20 serving as the base year for the eligibility criteria.

"The scheme is a welcome step towards encouraging investments by dairy sectors in VADPs and help in integrating the entire dairy supply chain. Companies with a significant presence in product categories like mozzarella cheese and ready-to-consume milk-based processed beverages will benefit from PLI incentives.

"In the first phase, four large dairy players have been shortlisted in category-I of the scheme," Icra Vice-President and Sector Head Sheetal Sharad said.

Within the dairy sector, the value-added products (VADP) segment has been rising at a healthy pace assisted by rising disposable incomes, changing dietary preference and healthy demand from institutional and QSR segments, the report noted.

The Dairy Processing and Infrastructure Development Fund and the Animal Husbandry Infrastructure Development Funds have also aided dairy processing and value addition.

The Mission Milk activities would be carried through for the next five years under the National Dairy Plan (NDP) Phase-II, which has a budget of Rs 8,000 crore (US$ 1.04 billion).

"Incremental sales CAGR (compound annual growth rate)-linked incentives will push the dairy players to augment their dairy processing capacities. Healthy growth prospects post-COVID-19 impact will enable them to help achieve incentive targets.

"The industry is expected to continue with moderate capex (capital expenditure) plans to aid the growth in organised dairy segments with portfolio expansion," Sharad added.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.