Exploring India's Dairy Export Competitiveness: Insights from a Gravity Model Analysis

Abstract

The present study examines India's competitiveness in the global dairy trade using secondary data from UNCOMTRADE and World Bank databases, focusing on four major dairy products at the HS 6-digit level from 2000 to 2023. We examined four major dairy products accounting for about 90 per cent of India's dairy exports comprising milk powder (HS 040210), butter (HS 040510), other milk fats and oils (HS 040590), and certain cheeses (HS 040690). The countries like the USA, New Zealand, Germany, Netherlands, and France lead the global dairy trade with strong international export relationships. In contrast, India's dairy exports are mainly directed toward neighbouring Middle Eastern countries such as Bangladesh, UAE, and Saudi Arabia, major importers. India's unit export prices for these products are generally competitive but often lower than those of the top global exporters. The results from the gravity model indicate that distance had a consistently negative impact on trade flows across all product categories. The GDP effects varied across the products, with milk powder exports declining and butter rising with an increase in partner country GDP. Our findings suggest the need for product-specific and market-specific export strategies to fully capitalize on its position as the world's largest milk producer. India should focus on overcoming distance-related trade barriers, addressing the unique demands of various dairy product markets, and improving product quality to secure higher prices.