However, the government has decided to import 10,000 tonnes of milk powder from abroad under the tariff rate quota.
The dairy industry has opposed the move, calling it untimely. Dairy traders say that import of milk powder will harm the farmers of the country.
Managing director of Gujarat Co-operative Milk Marketing Federation (GCMMF), R.S. Sodhi, said the decision to import milk powder on cheaper duty is an untimely decision.
“Due to reduced milk consumption, there is 15 per cent more supply of milk than consumption. Most of the milk is being used to make milk powder and butter for which the market is already sluggish. Despite this, the government has allowed import of milk powder at a cheaper duty,” he added.
Milk consumption has reduced due to loss of business of the confectionery, canteens, hotels and restaurants due to the coronavirus pandemic.
Radheshyam Dixit, Chairman of Ananda Dairy, said the demand for milk in the HoReCa segment is only 10.15 per cent as against its consumption which is around 25 per cent.
He said farmers were not getting adequate returns on the milk sold by them and the decision to import milk powder will be disastrous for them.
According to a June 23 notification by the Central Board of Indirect Taxes and Customs, import of 10,000 tonne of milk powder has been allowed under the tariff rate quota at 15 per cent import duty.
Hotels, restaurants, canteens were closed when the entire country was under shutdown from March 25 to curb the outbreak of Coronavirus. Though open now, people still fear going to hotels or restaurants.
With the closure of educational institutions, canteens are still closed which has further reduced the consumption of milk in the country as compared to its supply.