CHAPTER-IV

Integrated Scheme on Agriculture Cooperation

12.1 The cooperatives play an important role in the National economy. There are about 6 lakhs
cooperative societies in the country. About 100% villages and 71% rural households are
attempted to be covered by these cooperative societies. Around 16% agricultural credit & 35%
fertilizer is distributed by cooperatives and 26.5% fertilizer is produced by the cooperatives.
Further, 45% of total sugar production in the country comes from cooperative sugar mills. In
the areas of milk production, oil seeds, cotton, handloom, fisheries, cooperatives are making
significant contribution.
12.2 The cooperatives, however, are beset with a number of problems, viz., financial unviability, poor governance and management, lack of professionalization, operational
inefficiency and obsolete infrastructure. With the present scenario of economic liberalization
and globalization, cooperatives have to compete with other private enterprises. The capacity
building, marketing infrastructure and information, storage and agro processing are the crucial
elements of development of cooperatives in the present context. The basic objective of the
Cooperation Division is to design long-term and short-term strategies for reducing economic
disparities between the downtrodden rural people and the rural rich as well as regional
imbalances including rural and urban differences.
12.3 The Central Sector Integrated Scheme on Agricultural Cooperation which is a result of
merger of two erstwhile schemes of 11th Five Year Plan, namely, Restructured Central Sector
Scheme for Assistance to NCDC Programmes for Cooperative Development and Central
Sector Scheme for Cooperative Education and Training is being implemented during 12th Five
Year Plan. The scheme seeks to achieve the objectives of Agriculture Policy relating to the role
of Cooperative in support of agriculture. The Agriculture Policy, as a measure of institutional
structure, envisages that the government will provide active support for promotion of
cooperative form of enterprises and ensure greater autonomy and operational freedom to
improve their functioning. During the year 2013-14 against the Budget Estimate (BE) of Rs.110
crore which was reduced to Rs. 90.25 crores at RE Stage, an amount of Rs.87.34 crore was
released to these institutions. A provision of Rs.84.50 crore which was reduced to Rs. 46.00
crore at RE Stage, made under the head of Non Plan for implementing Market Intervention
Scheme/ Price Support Scheme through NAFED against which Rs.45.99 crore was released
during the year to concerned agency.
12.4 Assistance for the Scheme of Cooperative Education and Training: The Government of
India has been implementing a Central Sector Scheme for Cooperative Education and Training
through the National Cooperative Union of India (NCUI) and the National Council for
Cooperative Training (NCCT) since the 3rd Five year plan. It is a continuing scheme. However
from the 12th Five Year Plan all the schemes of Cooperation Division have been merged in a
single scheme namely Central Sector Integrated Scheme on Agricultural Cooperation. The
National Cooperative Union of India has been implementing the Central Sector Scheme for
Cooperative Education in cooperatively under developed States/under developed areas of
Developed States. The Government of India had been providing 100% grants-in-aid to NCUI
for implementing the Special Scheme of intensification of Cooperative Education in
cooperatively under Developed States. From 12th five year Plan it has been proposed that
Department of Agriculture & Cooperation (DAC) will provide expenditure upto 50% to NCUI

and rest of the expenditure will be met from Cooperative Education fund. At present NCUI is
running 44 projects spread over 22 States/UTs. During the year 2012-13, an amount of Rs.
358.50 lakhs was released as grants-in-aid to NCUI including Rs. 30 lakh for the NE regions.
The NCUI organized 27,698 events and imparted education to 4.63 lakh persons, including 66
training programmes for 1998 persons.
12.5 The Cooperative Training Programmes are being conducted by the National Council for
Cooperative Training (NCCT) through its 5 Regional Institutes of Cooperative Management,
14 Institutes of Cooperative Management, located in different States and the Vaikunth Mehta
National Institute of Cooperative Management, Pune. The NCCT had also been receiving 100
percent financial assistance for conducting cooperative training programmes up to 11th Five
Year Plan. However, from 12th five year plan onwards it has been proposed that NCCT will
meet its requirement by utilizing interest earnings of corpus funds created during the 10th Plan
by equal contribution of Rs.100 crores by the GOI and cooperative movement. The Council
provides academic support to Junior Cooperative Training Centers (JCTC) in the country
which is run by State Cooperative Unions/States Governments. There is no change in pattern
of financial assistance as far as JCTC and VAMNICOM is concerned. During the year 201213, DAC released Rs. 570.00 lakhs to NCCT for the VAMNICOM component.
12.6 Cooperative Education and Training Activities in the North Eastern Region: The
Government of India is implementing a special scheme for Intensification of cooperative
education in cooperatively under-developed States including the North-Eastern Region through
NCUI. NCUI has established 8 field projects, namely, Aizwal (Mizoram), Thobal & Imphal
(Manipur), Mangalwaria (Sikkim), Shillong (Meghalaya), Kohima (Nagaland), Morigaon and
Jorhat (Assam) in the North-Eastern Region.
12.7 Women Development Activities: With the overall objective of bringing women in the
cooperative fold from grass root levels by informal approach and to revitalize and develop
women participation in group activities and to improve the socio-economic conditions of
women of selected blocks, NCUI is now running 4 exclusive women development projects
located at Shimoga (Karnataka), Berhampur (Odisha), Imphal (Manipur) and Bhopal (MP)
under the Special Scheme of intensification of Cooperative Education in the cooperatively
under-developed states. Besides, each field project has got a special women development
component. Under this, women are organized into self-help groups and help them to develop
thrift habits. Women are also given training to undertake income-generating activities with the
help of their own resources or by borrowing from cooperatives.
The projects personnel help them in marketing their produce in the local market by organizing
fair/exhibitions. During the year 2012-13, a total number of 31,358 women were benefited by
the education programmes organized by the cooperative education field projects in NE states.
12.8 Assistance to NCDC Programmmes for Development of Cooperatives: The
Government of India implements its cooperative development programmes through National
Cooperative Development Corporation (NCDC). The programmes/schemes being
implemented through NCDC are (i) Integrated Cooperative Development Projects in selected
districts, (ii) assistance to cooperative marketing, processing and storage etc., programmes in
cooperatively under-developed/least developed States/Union Territories and (iii) share capital
participation in growers/weavers cooperative spinning mills under the restructured central
sector scheme. It has been decided that under this scheme, subsidy component will be provided

by Government of India and the loan component will be arranged by NCDC through its own
sources.
12.9 NCDC is a non-equity based development financing institution created exclusively for the
cooperative sector with the objective of planning and promoting programmes for production,
processing, marketing, storage, export and import of agricultural produce, food stuff and
certain notified commodities and services on cooperative principles. With amendment of
NCDC Act in 2002, scope of activities of the Corporation has been widened to cover livestock,
cottage and village industries, handicrafts, rural crafts and certain notified services besides
enabling NCDC to lend directly to cooperative societies on furnishing security to the
satisfaction of the Corporation. With notification of additional services like tourism,
hospitality, transport, electricity & power, rural housing, healthcare, hospitals and education
cooperatives, the scope of NCDC funding has been further broadened. The Central
Government has however prescribed an overall ceiling of twenty five percent (25%) of annual
budget of NCDC for financing all activities under notified services so that focus of NCDC
continues on financing of cooperatives in agriculture & allied sector. The rates of interest on
NCDC loans ranged between 10.40% and 13.00% during the year. In 2013-14, an assistance
of Rs 5,267.04 crore has been disbursed by the NCDC against approved outlay of Rs. 4,500.00
crore.
12.10 Cooperative Spinning Mills: In order to improve economic condition of the cotton
growers as well as handloom & power loom weavers and to consolidate the gains achieved so
far, the Department, through NCDC, continued to provide financial assistance to the spinning
mills & ginning and pressing units in the cooperative sector. During the year 2013-14, NCDC
released an overall amount of Rs. 83.23 crore, including Rs 64.39 crore under Restructured
Central Sector Scheme. NCDC is implementing Restructured Central Sector Scheme of DAC
for share capital participation in Growers/Weavers Cooperative Spinning Mills. Term loans
are met out of funds of the Corporation and subsidy is provided by DAC under this scheme.
12.11 Cooperative Storage and Cold Storage: The Department of Agriculture and
Cooperation (DAC), through NCDC, has been making systematic and sustained efforts to assist
cooperatives in creating additional storage capacity aimed at facilitating expanded operations
of cooperative marketing of agriculture produce, distribution of inputs and sale of consumer
articles. Storage capacity assisted by NCDC has increased from 11 lakh MT to 159.96 lakh MT
as on 31.3.2014. During the year 2013-14, financial assistance of Rs. 46.66 crore (Rs 33.80
crore loan + Rs. 12.86 crore subsidy) has been released and Rs 98.48 crore (Rs 67.29 crore
loan + Rs 31.19 crore subsidy) has been sanctioned for the storage programme under Central
Sector Scheme of DAC.
12.12 NCDC provides financial assistance to the extent of 90% of the block cost to the State
Governments for setting up / modernization / expansion / rehabilitation of cold storages and
Ice plants by cooperatives. In case of direct funding, assistance to the extent of 75% is provided.
NCDC has also dovetailed its cold storage programme with National Horticulture Board
(NHB). In such cases quantum of assistance provided by NCDC is reduced by the subsidy
available under the Capital Investment Scheme (CIS) of NHB. The scheme provides enhanced
back-ended subsidy @ 40% of the project cost for general category and 55% in case of hilly
and scheduled areas for maximum storage capacity upto 5,000 MT per project at normative
cost @ Rs 6000 / 7000 / 8000 per MT as per prescribed standards under the scheme. During
the financial year 2013-14, assistance of Rs 2.30 crore has been sanctioned to one cold storage

project at Mahua, Bihar and Rs 3.89 crore has been released to such projects including spillover
assistance.
12.13 Integrated Cooperative Development Projects: NCDC is implementing Integrated
Cooperative Development Projects (ICDP) Scheme in selected districts in the rural areas.
During the year 2013-14, 19 projects in the States of Jharkhand (3), Arunanchal Pradesh (1),
Haryana (1) Kerala (1), Himachal Pradesh(3), Madhya Pradesh (2) and Uttar Pradesh (8) worth
Rs 421.99 crore have been sanctioned involving NCDCs share of assistance of Rs 405.70 crore
(Rs 321.20 crore as loan and Rs 84.50 crore as subsidy). During the same period, NCDC has
released loan assistance of Rs. 262.64 crore and Subsidy of Rs 39.54 crore totaling to Rs 302.18
crore for ICDP. The subsidy of Rs 39.54 crore includes Rs 12.16 crore towards expenditure on
Project Implementation Team.
12.14 Cooperatives in under developed States: The process of economic development in the
country brought to light certain regional disparities and imbalances in some parts due to
inherent factors like topography, agro-climatic conditions and poor infrastructure. During
formulation of the Fifth Five Year Plan, limitation of this approach came to force and as a
consequence, the concept of cooperatively under-developed States evolved to ensure balanced
regional development. The categorization of States for funding by NCDC was reviewed by the
Planning Commission in November, 2004. Accordingly, Andhra Pradesh, Uttar Pradesh,
Madhya Pradesh and Goa were also placed under the category of cooperatively under
developed states. Similarly Jharkhand, Bihar and Jammu & Kashmir were classified as
cooperatively least developed States, in addition to the existing States. Now ten States and two
UTs., have been categorized as cooperatively under-developed and 11 States as leastdeveloped. During the year 2012-13, financial assistance of Rs 2461.14 crore has been
disbursed by the NCDC to cooperatives in cooperatively least/under-developed states/UTs.,
under its various schemes. During the year 2013-14, an amount of Rs.3,126.23 crore has been
provided for cooperatives in cooperatively least/under-developed states/UTs., under its various
schemes.
12.15 Strengthening of National-level Cooperative Federations and Multi State Cooperative
Societies (MSCS): The objective of the scheme is to assist the National Level Federations and
Multi State Cooperative Societies which are undertaking promotional and research activities,
bringing about improvement in infrastructural facilities and also to assist in building up their
equity base for betterment of the cooperative movement and improving the cooperative
activities in the rural areas of country.
12.16 Development of Women Cooperatives: NCDC encourages women cooperatives to
avail assistance under its various schemes. A large number of women members are engaged &
involved in cooperatives dealing with fruits & vegetables, ICDP, sugarcane processing,
consumer stores, handloom, power loom, spinning and services etc. activities. Upton
31.03.2014 the NCDC has cumulatively sanctioned and released financial assistance of Rs.
182.58 Crore and Rs 89.93 crore respectively for the development of cooperative societies
exclusively organized by women. This included foodgrain processing, plantation crops, oilseed
processing, fisheries, Integrated Cooperative Development Projects (ICDPs), spinning mills
handloom and powerloom weaving etc. During 2013-14, NCDC has sanctioned Rs 42.07 crore
for women cooperatives under ICDP Rs.12.40 crore), fisheries (Rs 4.42 crore), and power loom
(Rs 25.25 crore), programmes.

12.17 Revitalization of Cooperatives: With phenomenal expansion of cooperatives in almost

all the sectors, signs of structural weakness and regional imbalances have also become
apparent. The reason for such weakness could be attributed to the large percentage of dormant
membership, heavy dependence on Government assistance, poor deposit mobilization, lack of
professional management, mounting overdues, etc. Concrete steps have now been initiated to
revitalize the cooperatives to make them vibrant democratic organizations with economic
viability and active participation of members. The steps taken for revitalization of cooperatives
include enunciation of a National Policy on Cooperatives, revamping of cooperative credit
structure and reforms in cooperative legislation for providing an appropriate legislative framework for sound and healthy growth of cooperatives.
12.18 Amendment to the Constitution in respect of Cooperatives: Pursuant to the Common
Minimum Programme of the UPA Government to ensure the democratic, autonomous and
professional functioning of cooperatives, it was decided to initiate a proposal for amendment
to the Constitution for the purpose. Accordingly, the Constitution Amendment Bill was
introduced in 14th Lok Sabha, However, the same could not be discussed for passing. The Bill
lapsed upon dissolution of the 14th Lok Sabha. Thereafter, The Constitution (One Hundred and
Eleventh Amendment) Bill, 2009 was introduced in Lok Sabha on 20.11.2009. The Bill was
passed in Lok Sabha on 21.12.2011 and in Rajya Sabha on 28.12.2011 as The Constitution
(Ninety Seventh Amendment) Act, 2011 and Honble President of India has given her assent
to the aforesaid Act on 12.01.2012. The Act came into force w.e.f. 15.02.2012 vide Gazette
Notification dated 08.02.2012.
12.19 The object of The Constitution (Ninety Seventh Amendment) Act, 2011 is to ensure that
the cooperative societies in the country function in a democratic, professional, autonomous and
economically sound manner. The amendment in the Constitution, inter alia, seeks to empower
the Parliament in respect of multi-State Cooperative Societies and the State Legislatures in case
of other cooperative societies to make appropriate law, laying down the following matters,
namely:

Right to form cooperative societies as a Fundamental Right by insertion of the words

cooperative societies in sub clause (c) of clause (1) of Article 19.l Provisions for
incorporation, regulation and winding up of co-operative societies based on the
principles of democratic member-control, member-economic participation and
autonomous functioning.
Insertion of Article 43B in part IV of the constitution as Directive Principle of State
Policy for Voluntary formation of cooperative societies.
Specifying the maximum number of director of a co-operative society to be not
exceeding twenty-one members.
Providing for a fixed term of five years from the date of election in respect of the elected
members of the board and its office bearers; and an authority or body for the conduct
of elections to a cooperative society.
Providing for a maximum time limit of six months during which a board of directors of
co-operative society could be kept under supersession or suspension.
Providing for independent professional audit.
Providing for right of information to the members of the co-operative societies.
Empowering the State Governments to obtain periodic reports of activities and accounts
of co-operative societies.

Providing the reservation of one seat for the Scheduled Castes or the Scheduled Tribes
and two seats for women on the board of every cooperative society, which have
individuals as members from such categories.
Providing for offences relating to-operative societies and penalties in respect of such
offences.

12.20 Amending the State Cooperative Societies Acts in tune with the provisions of the above
amendments in the Constitution will not only ensure autonomous and democratic functioning
of the cooperatives, but also ensure accountability of management to the members & other
stakeholders and also enhance public faith in these institutions. The Constitutional amendment
provides for a maximum period of one year from the date of its commencement to amend the
state laws relating to cooperative societies, if required, to make them consistent with the
provisions of the amendment. So far 15 States, viz. Arunachal Pradesh, Assam, Bihar,
Chhattisgarh, Gujarat, Haryana, Karnataka, Kerala , Madhya Pradesh, Mizoram, Odisha,
Rajasthan, Tripura, Uttar Pradesh and West Bengal have amended their State Cooperative
Societies Acts in consonance with the constitution(97th Amendment) Act, 2011 through the
legislative process; while two States viz. Maharashtra and Tamil Nadu have done so by issuing
ordinances. However, in the meantime certain provisions of the Constitution (97th
Amendment) Act, 2011 have been struck down by the Honble High Court of Gujarat at
Ahmedabad vide order dated 22.4.2013 in WP (PIL) No.166 of 2012. The union of India has
filed SLP No. 25266-25267 on 12.7.2013 before the Honble Supreme Court against the
aforesaid order.
12.21 Amendment to the Multi-State Co-operative Societies Act, 2002: The MSCS
(Amendment) Bill, 2010 was introduced in Lok Sabha on 15.11.2010. The proposed
amendment intends to strengthen the Cooperatives by making them more member-driven and
professional. Bill was referred to Standing Committee on Agriculture for examination and
report. The report of Standing Committee on Agriculture was presented on 20.12.2012 and the
same is under consideration of the Department.
12.22 Helping farmers in getting remunerative price for their produce through NAFED:
The Department of Agriculture & Cooperation is implementing Price Support Scheme (PSS)
for procurement of oilseeds and pulses through NAFED, NCCF, CWC and SFAC at the
Minimum Support Price (MSP) declared by the Govt. The Department is also implementing
Market Intervention Scheme (MIS) for horticultural and agricultural commodities generally
perishable in nature and not covered under Price Support Scheme, thus, helping the farmers in
getting remunerative price for their produce.
12.23 Price Support Scheme (PSS): The Department of Agriculture & Cooperation
implements the PSS for procurement of oil seeds and pulses through National Agricultural
Cooperative Marketing Federation of India Ltd. (NAFED) and Small Farmers Agri-Business
Consortium (SFAC) which are Central nodal agencies, at the Minimum Support Price (MSP)
declared by the government. NAFED is the central nodal agency for procurement of cotton
also under PSS. Central agencies undertake procurement of oil seeds, pulses and cotton under
the PSS as and when prices fall below the MSP. Procurement under PSS is continued till prices
stabilize at or above the MSP. Losses, if any, incurred by central agency in undertaking PSS
operations are reimbursed by the central government. Profit, if any, earned in undertaking PSS
operations is credited to the Central Government.

12.24 Achievement under Price Support Scheme (PSS): During the Milling Copra 2013, the
prices of Milling Copra ruled below respective MSP fixed for the relevant marketing season.
NAFED procured Milling Copra during the Milling Copra 2013 as per the details given below:S. No.
1.0
2.0
3.0
4.0
5.0

State

Quantity in MTs

A & N Islands
Andhra Pradesh
Kerala
Lakshadweep
Tamil Nadu

Ex-godown value (Rs. in lakhs)

3,300
1
41
538
551

1,732.50
0.53
21.53
282.45
289.28

12.25 Further, a quantity of 29,535 MTs of Ball Copra at the MSP of Rs. 5,500 per quintal
valuing Rs. 16,244.25 lakhs were also procured. A quantity of 4,384 MTs of sunflower seed
valuing Rs. 1,622.08 lakhs in Odisha, Karnataka and Andhra Pradesh were procured. Further,
groundnuts under PSS were also procured as per the details given below:
Quantity in MTs
Ex-go down value (Rs. in lakhs)
State
Odisha
830
307.10
Gujarat
1,07,203
42,881.20
Rajasthan
1,89,767
75,906.80
Uttar
7,347
2,938.80
Pradesh
8,819
3,527.60
5.0 Karnataka
61
24.40
6.0 Maharashtra
30,190
12,076.00
7.0 Andhra
Pradesh

S. No.
1.0
2.0
3.0
4.0

12.26 During Kharif 2012-13 and 2013-14, urad, tur and gram were also procured as per the
details given below: S. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.

State
Maharashtra
Andhra Pradesh
Uttar Pradesh
Rajasthan
Madhya Pradesh
Karnataka
Gujarat
West Bengal
Jharkhand

Urad
Quantity in MTs
35,462.00
7,963.54
16,930.25
8,409.47
3,285.89
9,871.90
442.74
2,022.64
103.57

Ex-go down value (Rs. in lakhs)

15,273.58
3,424.32
7,280.00
3,616.07
1,412.93
4,244.91
190.37
868.32
44.53

Tur
S. No.
1.

State
Maharashtra

Quantity in MTs
32,536.00

Ex-go down value (Rs. in lakhs)

13,585.92

2.
3.

Andhra Pradesh
Madhya Pradesh

28,911.83
66.00

12,119.48
25.41

Gram
S. No.
1.
2.
3.

State
Maharashtra
Andhra Pradesh
Karnataka

Quantity in MTs
4,932
24,388
5,430

Ex-go down value (Rs. in lakhs)

1,528.92
7,560.28
1,683.30

12.27 NAFED also procured cotton under PSS as per the details given below:S.
No.
1.0

State

Variety

Maharashtra

2.0

Andhra
Pradesh

Bunny
H-4/H-6
Bunny
H-4/H-6

Quantity in
MTs
1,203.20
16.20
1,80,290.95
-

Ex-go down Value (Rs. in lakhs)

469.25
6.16
70,273.96
-

12.28 Market Intervention Scheme (MIS): The Department of Agriculture & Cooperation
implements the Market Intervention Scheme (MIS) for procurement of horticultural
commodities which are perishable in nature and are not covered under the Price Support
Scheme. The objective of intervention is to protect the growers of these commodities from
making distress sale in the event of a bumper crop during the peak arrival period when the
prices tend to fall below economic levels and cost of production. The condition is that there
should be either at least a 10 percent increase in production or a 10 percent decrease in the
ruling market prices over the previous normal year. The Market Intervention Scheme (MIS) is
implemented at the request of a state / UT government which is ready to bear 50 percent of the
loss (25 percent in case of North-Eastern States), if any, incurred on its implementation. The
extent of total amount of loss to be shared on a 50:50 basis between the central government
and the state government is restricted to 25 percent of the total procurement value which
includes cost of the commodity procured plus permitted overhead expenses. Under the Scheme,
in accordance with MIS guidelines, a pre-determined quantity at the fixed Market Intervention
Price (MIP) is procured by NAFED as the Central agency and the agencies designated by the
state government for a fixed period or till the prices are stabilized above the MIP whichever is
earlier. The area of operation is restricted to the concerned state only. The details of MIS
implemented during the year 2012-13 and 2013-14 as on 31.03.2014 are as below:

S.
No.
1)
1
2
3
4
5
6
7
8
9

Year

Commodity

2)
2012-13
20.03.2012 to 20.05.2012
2012-13
25.05.2012 to 25.06.2012
2012-13
01.06.2012 to 30.06.2012
2012-13
01.12.2012 to 31.12.2012
2012-13
01.01.2013 to 31.03.2013
2012-13
07.03.2013 to 07.04.2013
2013-14
01.08.2013 to 21.10.2013
2013-14
01.08.2013 to 31.08.2013
2013-14
20.02.2014 to 20.03.2014

3)
Turmeric

MIP (Rs.
Per MTs)
4)
40,000/-

Chilly

41,000

Turmeric

40,000/-

5)
Andhra
Pradesh
Andhra
Pradesh
Tamil Nadu

Iskut
(Choyate)
Oil Palm
FFB
Potato

5,600

Mizoram

4,000

5,720/-

90,000

C-grade
Apple
Pineapple

6,500/-

Andhra
Pradesh
Uttar
Pradesh
Himachal
Pradesh
Nagaland

Potato

3,750/-

Uttar
Pradesh

1,00,000

3,580/-

8,500/-

State

Sanctioned Qty.
(in MTs.)
6)
54,000
52,000
35,000

1,00,000
27,000
12,675

PROBLEMS OF INDIAN SUGAR INDUSTRY:

1) The Problems of high price of sugar:
The efficiency and uneconomic nature of production in sugar mills low yield and short crushing
season the high price of sugar cane the heavy excise duties, leaved, by the government these
are responsible for the high cost of production of sugar in India. The price of Indian sugar in
considerably higher than the world price of sugar. A part from the manipulations of stocks by
sugar factories, hoarding, Speculation. And black marketing of sugar by wholesale dealers are
rampant in India.
2) Gur Price:
The output of sugar is also greatly influenced by the relationship between cane prices and Gur
price. From the production side sugarcane can be used for the price manufacturing of sugar or
Gur from the consumption side the substitutions of sugar in place of Gur Arises. When the
price of sugar full in relation to Gur Price
3) Shift in locational Pattern:
The sugar industry was initially located in Uttarpradesh and Bihar which together accounted
for about 60 Percent of sugar production in 1960. Analytical studies about production cost.
Revealed the irrational nature of the regional pattern of production. Since the sucrose content
of sugar cane begins to deteriorate sun after the stalks have been cut it is essential that mills
must be located in close proximity to the sources of raw material. Consequently attempts were
made to locate to new unit in the can producing states. As a result of these the share Of U.P.
and Bihar declined from 60% in 1960 61 to 28% in 1980-81 while that of Maharashtra,
Andhra-Pradesh, Karnataka, and Tamilnadu. Taken together rose from 31% to about 60% in
that year, if this trained is counted; there may be a further shift in the locational pattern. The
declined in the importance of UP and Bihar is mainly due to server competition faced from
other state.
4) Roll of Co-Operative sector:
During recent years Co-Operative sectors has been increasing in importance in sugar industry
there know 211 Co-Operative Sugar Factories producing over 60% of the total output of sugar
Co-Operative Sugar mills have to positive advantages in their favour. First they get the
maximum supply of sugar cane as almost all the sugar cane farmers are members of the CoOperative Sugar mills secondly the profits of the cooperative unit are distributed among
member farmers instead of going into the hands of a few Sugar Barons
5.) Need for can development
The factor which is of crucial importance in the growth of sugar industries the yield of sugar
cane there is a steady increase yield of sugar cane per hectare from 33 tons. In 1950-51 to the
70 tons on 2000-07 and 80 tons in 2007 it may be maintained here that average sugar cane
productivity in other countries range between 134tones per hectare (subtropical regions) to one
88tons per hectare (Tropical regions) percentage recovery of sources is the second factor which
determines production in India both the yield of sugar cane per acre and percentage recovery
of sources is low point. There is possibility of doubling or even trebling the yield the sugar
cane.

6.) Competition from Gur Production:

10 tons of sugar is obtained from 100 tons cane but in case of Khandsari only 7 tonnes of sugar
are derived. Thus there is a net loss to the country by the use of cane from Khandsari and Gur
the recovery content of Gur is only 5%. But since it is a food of higher nutritive value, the
demand for Gur is not only motivated by its use as a sweetening agent but also as an article
with specificity in its demand. But the Gur Factories deprive the community by 25 to 40% of
source when they divert the cane required by sugar mills. While the government fixes the price
of sugar cane supplied to the factories there is no price fixation for sugarcane used for Gur. The
obvious result is that production of Gur often increases at the cost of sugar. As a result of the
policy of price fixation alone, the distribution of sugarcane among the producers of sugar Gur
and Khandsari is not done on a fair basis. It is therefore necessary that price competition
between sugar Gur and Khandsari be avoided. It would be much more desirable to chalk out a
combined allocation of sugarcane for these three close substitutes at the same price.
7) Problems of Production of Sugar:
The Low yield of sugarcane, short crushing season, unsatisfactory location of industry in U.P
and Bihar and inadequate supply of cane all these create problems of production of sugar
factories have low milling efficiency and recovery of sugar from sugarcane is very low. One
reason for that is the uneconomic character of many of the sugar mills. Further Indian sugar
mills do not have sugar plantations of their own (as in the case of west of west Indias) and
hence do not have control over the quantity and quality of sugarcane. Supplied by the
innumerable cane growers.
8.) The problems of by products:
An important problem of sugar of sugar industry is the fuller utilization of by-products
specially bagasse and molasses. At one time, bagasse was used as fuel. While sugar factories
did not know what to do with the accumulating molasses a health hazard. At present small
paper plants are coming up to make paper and paper board, packing paper etc. Through using
bagasse. Molasses is now being used for the manufacture of power alcohol fertilizers cattle
feed etc. A number of sugar mills located in close proximity to each other are joining together
to utilize by products fully and effectively in this they help to bring dower the cost of production
of sugar.
9) Problems of faulty Government policy:
The sugar economy is highly controlled sugar factories were under compulsory licensing till
recent years. There is a statutory minimum price (SMP) for sugarcane fixed by the central
government and state advised prices (SMP) fixed by each state over and above the SMP. There
is a levy- normally 40% of the output on the sugar mills, which have to supply the levy quota
at prices, fixed much lower than the market prices. The levy sugar is allotted to the state / UT
Government for distribution through the public distribution system (PDS). Prices of levy sugar
are fixed zone wise on the basic of SMP of sugar cane plus conversion costs as recommended
by the bureau of industrial cost and prices. There is no price control on the sale of free sugar
however the market suppliers of free sale sugar are regulated by government by fixing monthly
release quota so as to maintain price stability.
There are price and distribution controls on molasses the major by product of sugar factories.
The government fixed export quotas and sugar exports have to be handling by designated

export agency. This whole scheme of sugar controls is not in the interest of the industry or the
economy. The government has announced its intention to review this policy regime with the
objective of making sugar industry globally competitive and generating export surplus while
insuring adequate supplies for domestic consumption as a part of restricting sugar industry
beginning was made when price and distribution controls on molasses were abolished in Jane
1993 the government has also announced number of incentives to encourage sugar mills to
maximize sugar production.
10) The Questions of minimum economic size:
The minimum economics size as it exists in India is 2500 tons of came crushed per day (tpcd)
this is much less than the minimum economic size in other countries for instance in Thailand
the average plant size is of 10000 tpcd against the average of 1400 tpcd in these country
according to some experts the sheer size makes us loss out in the economics of scale also the
small MES makes efficient use of by-products impossible.
11) Old Machinery:
Like jute and cotton textiles some sugar factory also requires replacement of old machinery
and modernization of production technique. The need is particularly great for the sugar
factories located in U.P and Bihar.
12) Competition From cheaper Imports:
Stiff competition from cheap imports is causing problem for the sugar industry sugar import in
recent years have been due to ample global availability and heavy export subsidies in several
countries including Pakistan, Brazil, and the European union. The international sugar prices
tumbled down so imported sugar is cheaper than domestic sugar.
13) Low sugar Recovery:
The Sugar recovery from the canes as also the yield of cane crop has been stagnant for a long
time for want of any major breakthrough in reading better verities of sugar cane. The average
recovery (Extraction rate for the Indian sugar mills is just 9.5 to 10 percent against 13 to 14
percent in some other producing countries
14) Overall observation:
The main reason for sickness in the sugar industry as many as 70 mills are lying closed are: the
practice of state advise price (SAP) for sugar cane low realization from the sale of molasses
fluctuations in sugar production non availability of adequate cane and the uneconomic size of
the mills and their out date machinery and mismanagement. This implies that adequate relief
and concessions would be required from state government banks and financial instructions for
the revival of sick and closed sugar mills.
15. Cane Price:
A High level Committee to be appointed by the Government for determining cane price which
should be linked to sugar price through some transparent formula based methodology. The
price so decided should also take into consideration inter-crop parity to avoid cyclicality in
sugarcane production.
16. Release Mechanism:

Sugar is sold by sugar factories on the basis of release orders issued monthly by the Sugar
Directorate, Government of India. Release mechanism should be discontinued in order to have
better cash management and timely payment to the farmers. Price discovery should be done
through a transparent Forwards and Futures market.
17. Levy Sugar Obligation:
The Government declares a certain proportion of sugar production as Levy sugar (at present
10% of total production) to be sold under Public Distribution System at pre-determined prices
(which is way below the cost of production of the mills). This causes a huge financial burden
on the mills. Levy sugar obligation should be totally abolished and if the Central Government
wants to provide any sugar under the Public Distribution System it should buy such sugar from
the open market and subsidies it from its own resources.
18. Import/Export Policy:
The Government should have a Pro-active Import/Export Policy in order to ensure reasonable
sugar prices so that sustainable cane prices can be paid to the farmers.
19. De-reservation of Cane Area:
Reservation of cane area should be removed. This will help in efficient use of resources, better
farmer-miller relationship and will provide a level playing field. Farmers will also have the
option of supplying their cane to which ever miller he wants.
20. Packing Material:
The Ministry of Textile has been prescribing the minimum percentages from time to time for
compulsory packaging of sugar in jute bags. The packing cost of sugar in jute bags is very high
compared to the other packaging material. The sugar industry is subsidizing jute industries.
The Government should fully exempt the sugar industries from compulsory packaging in jute
bags.
21. Priority Sector:
Sugar industry has been cash striven for decades. Finance is not easily available from
institutions to new sugar factories and to existing factories for expansion as well as for working
capital requirements. Sugar sector being a very important sector in agronomy space should be
classified as a Priority Sector. Besides major issues as above, sugar industry is facing other
issues also as under:
Underutilization of plants installed capacity due to low availability of Sugar Cane
Utilization of sugar cane by Gur / Khandsari industry without any control
Low Recovery
Prices of Ethanol
Sale of Cogen power in open market
REMEDIES ON THE PROBLEMS OF INDIAN SUGAR INDUSTRIES
Some recommendation for improvement of Indian sugar industries in other words this remedies
on the problem of Indian sugar industries point of my view.

1) To restart closed mills

Though Maharashtra has 163 sugar mills across the state 56 have been shut down. Permanently
and more than 50 have already reached their capacity of carousing this.
Situation has created panic among the growers that their crop is not for different in the joining
states of Karnataka, Tamilnadu, and Andhra-Pradesh. But the ultimate answer to these
livelihood issue remains unanswered as not a single policy has so for been drafted to solve this
issue
The authority should regulate the situation arising as of now in the sugar industry and solve the
problem at the earliest. Timely assistance is very essential in agriculture as anything can waif
but not agriculture. (Nehru)
2) To provide Minimum Supportive Price:
Formulations of sugar policies are very essential which should support the domestic sugar
industry and the sugar cane growers. Minimum supportive price should be announced before
the beginning of the sugar. This would avoid creation of glut in the sugar cane production.
3) To encourage exports:
To encourage the export of excess sugar produced government should provide export duty
exemptions and tax waivers. Proper market analysis and forecasting if the price is also essential
to avoid any harm growers Or to the sugar mills. The growers should be made aware of the
crop insurance scheme which will help them in adverse conditions from losing any returns.
4) Credit for sugar cane farmers:
Over 90% of the people dependent on the agriculture do not have access to bank credit however
in the sugar came sector all the farmers sponsored by the sugar mills enjoy timely credit from
the banks with 100% recovery banks should advance more many to the sugar cane farmers
5) Issue of Gur and Khandsari units:
These units may be subjected to the some cane price obligations respective of weather it is a
normal year or not in terms of cane production this will avoid the efficiency losses of sucrose
by such unit. If the consumers have specials preference for their products they must be prepared
to pay higher price. A market best solution will thus avoid the insufficiencies associated with
anomalous treatment of such unit through bureaucratic loopholes.
6) Issue of regulations on sale of sugar:
Ideally the government should relive the sugar mills of leavy sugar payment at unremunerative
price. This will also relive the factories of the unnecessary hustles and implied cost burdens.
They face due to delayed lifting of sugar and delayed payment on levy sugar by the food
corporation of India the public distribution system (PDS) together with its associated
inefficienes ought to be maintained at a minimum scale. What the poor in India needs is
meaning full jobs which alone can provide steady source of income and not and inefficient
system of subsidy and that too at somebody elses cost. The government is of course free to
maintain PDS at any desirable scale through open market purchase of sugar as it is doing in
case of cereals. If the government cannot achieve this switch over in the short run it should

progressively reduce the levy sugar commitment of the sugar factories. Even the restrictions
on free sale of sugar can be dispensed with. The fear that the mills would raise the domestic
price through the creations of artificial scarcity is an immaterial one as long as the option of
sugar import with reasonable tariff duties is open to the country. The other fear is that the
industry in its eagerness to sell too much within too short period will push down the domestics
price level is an equally unrealistic one as this a common problem to any industry which it must
manage itself the industry was earlier managing exports very well by spreading the loss across
all units so given an opportunity to manage their supply subject to some broad guild lines and
safeguards (for exp. A buffer stock requirement) which the government can prepared with
adequate homework and stipulate the industry should be in position to handle the matter the
artificial lowering of domestic price of sugar in merely serving the interest of downstream
industries which are bulk consumers of sugar in the free market. Ones these bureaucratic
barriers are removed the industry itself can take more interest in developing its own retails
distribution system. It will also make the management incentive schemes a redundant issue.
Ones again give the government usual apprehensions about switching gradually decreasing the
periodicity of release order Quota.
7) Issue of Industrial sickness:
Although the incidence of inefficient operations and resulting sickness is one average higher
for Co-Operative and public sector units private sector too is not free such problem as the
present study demonstrates.
As the Mahajan Committee and an earlier RBI Committee have suggested either the provisions
BIFR for rehabilitation of stick mills should be intended or an alternative arrangement must be
made without further duly to take care of the problems of sick Co-Operatives however it
appears that there are chronically sick mills in all the three sectors which cannot be rehabilitated
they must be allowed natural death by switching over to a market based system in the
functioning of this industry.
8) Financial Restructuring and meeting credit needs
The sugar industry in India has been in great financial stress since year 2001. It is therefore
essential to understand the factors that have contributed to it.
9) Effect of drought / floods on sugar production Maharashtra is the largest producer of
sugar in the country the Tamilnadu Andhra-Pradesh and Karnataka are some of the other major
producer of sugar this states are of crucial importance to national production of sugar droughts
in 2002- 2003 and 2003-04 and woolly aphid infestation have seriously efficient sugar cane
production in these states it is estimated that the availability of sugar cane was reduce from 165
lack tons in 2002-2003 to 121 lack tons in 2003-2004 in Tamilnadu from 120 lack tons in 20022003 to 86 lack tons in 2003-2004 in Andhra-Pradesh 172 lack tons in 2002-2003 to 100lack
tons in 2003-2004 in Karnataka and from 535 lack tons in 2002-2003 to 290 lack tons in 20032004 in Maharashtra on the other hand because of regular floods sugar cane production in Bihar
has been consistently falling. Since the last 4 years the sugar production in the country as a
result fell from 201 lacks M.T. in 2002-2003 to 140 lacks M.T. in 2003-2004.
Commodity Profile for Sugar
1.0
Sugar Estimates for India (Crop Year: October 2014 to September 2015)
(Unit: Lakh Tonnes)

Table 1: Sugar Production, Trade, Consumption and Availability

2013-14
2014-15 (Estimated)
Particular
March, 2015
72.13
Opening Stock
91.09#
250.46
Production
250.46^
245.54
8.38
Total Imports
6.04*
6.09
330.97
Availability
342.72
25.16
Total Exports
10.05*
27.03
248.00#
Consumption
243#
57.81
Ending Stock
72.13
Source: Department of Food & Public Distribution (DoF&PD), Department
(DoC)

Source
DoF & PD
DoF & PD
DoC
DoC
DoF & PD
DoF & PD
of Commerce

For preparing estimate for 2014-15 total exports and total imports have been taken as last three
years average.
Production and consumption projected by DoF&PD.
Availability: opening stock in central pool plus production plus Total Imports; Total
Availability for Domestic
Consumption: Availability minus (total export plus ending stock in central pool).
*: The figure of export and import is for October,14 - March, 2015.
#: As per Department of Food figures
^: production projected by Department of Food & Public Distribution for year 2014-15.
2.0 Production, Area under cultivation and Yield of Sugarcane and Sugar
Table 2: Production, Area Under Cultivation and yield of sugarcane and Sugar
Crop/marking Area
Production (Lakh Tonnes) Sugarcane Yield
Year
(lakh Hectares) Sugarcane
(Tonnes/Hectares)
Sugar
42.0
2811.7
193.2
66.92
2005-06
51.5
3555.2
282.0
69.02
2006-07
50.6
3481.9
263.0
68.88
2007-08
44.2
2850.3
146.8
64.55
2008-09
41.7
2923.0
188.0
70.02
2009-10
48.8
3423.8
243.5
70.09
2010-11
50.4
3610.4
263.4
71.67
2011-12
49.99
3412.0
258.5
68.25
2012-13
50.12
3521.4
245.5
69.84
2013-14
N.A.
3549.5#
250.46
N.A.
2014-15
Source: Department of Food & Public Distribution (for Sugar Production) and Agricultural
Statistics (for production and area of Sugarcane).
#: As per 2nd Advance Estimate (2014-15) of DAC released on 18/2/2015
Indias sugar production has increased in last 10 years at CAGR of 6.04 percent.

During the same period, Indias sugarcane production has increased at CAGR of 3.97
percent and area under cultivation at CAGR of 3.19 percent.

3.0 Indias Major Export Destinations and Imports Sources

Source: Department of Commerce

The major export destinations for India in 2013-14 were Sudan, Iran, Sri Lanka, and
UAE.
The highest decrease in the growth of Indias sugar export was recoded for UAE in
2013-14 compared to previous year.

Source: International Trade Centre (ITC)

Substantial part of Indias sugar imports came from Brazil in 2013. Germany, USA,
Netherland, and Pakistan also exporting sugar to India.

4.0 Trade Flow for India (Unit: Lakh Tonnes)

Table 3: Trade Flow for India during 2009-10 and 2014-15
Year
Export
Import
0.42
25.51
2009-10
17.11
11.98
2010-11
27.38
0.99
2011-12
27.91
11.21
2012-13
24.60
8.81
2013-14
19.54
15.38
2014-15
Source: Department of Commerce.

Trade figure shows, that India has been exporting sugar more than that of its import
since 2010-11.

5.0 Prices of Sugar in Bench Mark Domestic Market (Unit: Rs/ Quintal)
Table 7: Prices of Sugar in Bench Mark Domestic Market
6 May,
2015

Week Ago
(29 April,
2015)

Month Ago
(5 April,
2015)

Year Ago
(6 May, 2014)

Sugar: S grade
2523
2523
2498
3248
Erode
2412
2446
2360
3069
Kolhapur
NA
NA
NA
NA
Kolkata
2563
2572
2480
3234
Vashi
Sugar: M Grade
2735
2750
2635
3355
Delhi
2573
2573
2548
3298
Erode
2814
2785
2674
3382
Kanpur
2542
2562
2452
3173
Kolhapur
2779
2840
2695
3395
Kolkata
2695
2719
2628
3308
Muzaffar Nagar
Source: National Commodity & Derivatives Exchange Limited (NCDEX)

% Change
over Previous
Year

-22.32
-21.41
NA
-20.75
-18.48
-21.98
-16.79
-19.89
-18.14
-18.53

Domestic prices of sugar in major markets in April, 2015 were lower compared to
same period in the previous year.

Pharmaceutical Industry in India

The Indian pharmaceutical industry remained import dependent till 1972, deeming most of the
drugs unaffordable (Mohammad & Kamaiah, 2014). Political and policy developments in the
early 1970s such as the new patent acts of 1972 and Drug Price Control Order (DPCO), 1970
laid the foundation for a strong pharmaceutical industry in India. Public sector focus on
pharmaceutical industry and policies that curbed control of multinationals added to this
conducive policy environment that led to the growth of domestic firms and establishment of
India as a dominant supplier of pharmaceutical drugs across the world (Basant, 2007). In the
pre-TRIPs regime, the absence of product patents allowed local production of patented drugs
at a fraction of the original cost while process patents encouraged generic companies to reduce
the production costs of drugs. Indias compliance with the TRIPS regime that became complete
in 2005 has changed strategic options of Indian pharmaceutical firms.
In the year 2013, the Indian pharmaceutical industry was the third largest in the world in terms
of volume (Horner, 2014) estimated to be worth $ 10 billion in 2010(Gabble & Kohler,
2014).Of about 10500 units engaged in the production of drugs and pharmaceuticals, only
about 23 per cent produce bulk drugs; the remaining are engaged in the manufacturing of
formulations. Moreover, most of these units are in the unorganized or small sector with
approximately 250-300 units that can be categorized as organized or medium/large (Planning
Commission, 2012a). The industry also has a much skewed distribution with the top 10
Indian Pharmaceutical Industry at a Glance

3rd largest in terms of Volume; 10% of global volume

14th largest in temrs of Value; 1.5% of global value

Prior to 1970s foreign players controlled 80% of the market

Domestic market size is approximately USD 5.3 billion

In 2013 Indian pharmaceutical Imports amounted to USD 2.7billion

In 2013, Indian Pharmaceutical Exports amounted to USD 8.9 billion

The ten big pharmaceuticals control 36% of the Domestic Market

Source: Horner, 2014, Haley & Haley, 2012, Bedi, Bedi, & Sooch, 2013 and
Department of Pharmaceuticals, 2014.
manufacturers accounting for almost 37% of market share (Planning Commission,
2012b).Generic manufacturers dominate the Indian pharmaceutical industry and remain pivotal

in providing essential drugs at affordable prices. Patented drugs, on the other hand, comprise
approximately 1% of the pharmaceutical market in the country (Kochhar, 2014).
2.2 Healthcare in India
Health policy in India has historically centred on the idea of equity. More recently, it has been
broadened to incorporate the subject of universal healthcare. Ironically, despite the focus on
equity, accessibility and quality, India shoulders a high morbidity and mortality burden
(Balarajan et al., 2011) and requires innovative solutions to reduce them.
The State in India intervened directly in the healthcare sector by providing health
services through a chain of public hospitals and Primary Health Centres (PHCs). But a variety
of deficiencies plagued the efficacy of the healthcare system. One of the central drawbacks has
been limited expenditure in the sector (Duggal, 2007; Selvaraj & Karan, 2009). The National
Health Policy, 2002 directed the state to commit to universal health care through a realistic
consideration of capacity (MoHFW, 2002). The policy document identified its limited capacity
(infrastructure and resources) as a key challenge towards making healthcare available to all.
Expenditure on health has remained only about 1% of the GDP in 2011-12 (Planning
Commission, 2012b: p.4). Over the years, the states inability to provide for the health needs
of the population has resulted in the growth of the private healthcare sector. Currently, India is
one of the most privatized systems in the world (Abhiyan, 2012; Duggal, 2007). The states
strategy to withdraw from the public provision of healthcare has been criticized due to the
associated increase on the costs of healthcare (Duggal, 2007; Selvaraj & Karan, 2009).
Moreover, the recent move by the Federal government to reduce the health budget by 16-17%
would imply lower state involvement in the provision of public health (The Economic Times,
2014) and may further increase the cost of healthcare for Indian households unless state
governments who are expected to receive more resources from the Federal government use
these resources in a more innovative and efficacious manner.
Nonetheless, the 12 th five-year plan (2012-17) had outlined universal health coverage
as a central goal proposing an innovative strategy of combining insurance (Rashtriya Swasthya
Bima Yojana), contracting out services and promotion of generic drugs through prescription
drug reforms (Planning Commission, 2013). Such innovative policies are critical for providing
affordable healthcare and reduce the out of pocket expenses on the same. A significant fraction
(72%) of out of pocket expenses on healthcare is incurred on the purchase of drugs and other
medical devices (Kumar et al., 2011). Deregulation of drug prices in recent years had led to an
increase in the prices of branded drugs within the country (Bhargava & Kalantri, 2013) and has

been brought back partially. Consequently, access to affordable medicines remains a critical
issue and any policy or other innovation that can reduce costs would be very useful.
3. Changes in the IP regime and IP Policy Innovations
As mentioned, it is not possible to easily attribute health-related innovations in recent years to
the new TRIPS regime as a variety of other confounding factors are at work. Therefore, we do
not posit any such linkage. This section provides a brief summary of the new IP regime that
highlights the policy innovations that the Indian government has undertaken as a part of the
new regime. Additionally, the section identifies a few IP policy gaps that have surfaced and
need correction.
As discussed, the earlier IP regimes protection of process and not product inventions
resulted in Indian firms focus on process innovation and building of capabilities to produce
bulk drugs in a very cost-effective manner. There is no consensus on the impact of the new IP
regime on the innovation climate in the Indian pharmaceutical industry; while some suggest
that the impact has been positive (Bouet, 2014; Godinho & Ferreira, 2012), others argue that
the impact has been negative or insignificant (Mani, 2014; Chaudhuri, 2007). Still others argue
that while the jury is still out, interesting firm responses in terms of innovation can be seen
(Basant, 2011).
A number of firm-level and state-level strategies have helped the industry to adapt to
the changes in the IP regime. During the pre-TRIPS period the growth of the domestic public
sector and policies relating to science and technology, taxation, and FDI empowered Indian
pharmaceutical industry to adapt to the changes in the institutional environment and grow.
(Agarwal, Gupta & Dayal, 2007). In recent years, the liberalization policies, TRIPS- compliant
patent regime, and other policy support has resulted in a steady flow of inputs to support
product and process innovations: post TRIPS regime has seen an increase in the FDI and
technology transfers directed towards India (Agarwal et al., 2007; Rai, 2008; Chittoor et al.,
2008).
While some critics of the TRIPS compliant IP regime have argued that the new IP
regime would lead to a rise in the prices of drugs and expose domestic manufacturers to the
vagaries of international market fluctuations, others suggest that provisions to protect domestic
consumers and manufacturers are in place (Mani, 2014). These have taken the form of
conditions for compulsory licensing 4 (Section 84) and standards of patentability (Clause

3d1).These provisions attempt to balance the two ideals of ensuring access to medicines and
fostering innovation.
3.1 Policy Innovation to Avoid Evergreening
In the year 2006, Novartis applied to the Indian patent office seeking a patent for its
formulation Glivec. The application was rejected as the IPO viewed the move as an attempt
towards ever greening. Glivec or ImatinibMesylate is a formulation used in the treatment of
blood cancer or Chronic Myeloid Leukaemia (CML) and costs $ 5,000. The cost of the
medication acted as a strong barrier to many Indians who sought treatment. On the other hand,
the generic variant of the drug is available in India for a meagre $200.
Novartis applied for a patent in the year 1998, and in 2005, was granted exclusive
marketing rights and the application was mail boxed for consideration (Chaudhuri, 2014).
The patent application was rejected under clause 3(d) of the Indian Patent Act on the grounds
that the formulation was a modification of the existing drug and does not enhance efficacy
adequately. (Gabble & Kohler, 2014; Chaudhuri, 2014). Post the rejection of the plea in 2006,
Novartis challenged the decision in the Supreme Court of India. The court backed the ruling
and rejected Novartis appeal for a patent in 2013. It has been suggested that since the Indian
patent legislation does not define the term efficacy. Hence, the difference in interpretation
led to the rejection of the appeal (Gabble & Kohler 2014).
On March 4, 2015, using Article 3(d) the Indian Patent Office revoked Boehringer
Ingelheim Pharma GMBH & Co.s patent covering the drug Spiriva in a response to a postgrant opposition filed by the Indian generic drug-maker, Cipla. Interestingly, a pre-grant
opposition was also filed by another domestic firm in 2007 but the patent was granted.2
3.2 Compulsory Licensing
In 2012, Natco Pharma was granted a compulsory license to manufacture generic
variant of the Nexavar drug. Nexavar is the original formulation of Bayer and is used in treating
kidney and liver cancer. The drug costs $ 5500 vis--vis the generic variant that costs $141
(Kochhar, 2014; Hirschler, 2014). Bayer contested the license in the Indian court and lost
(Hirscheler, 2014). The arguments used were that the drug availability did not meet the
reasonable requirements of the public, that it was not reasonably affordable and was not
sufficiently worked in India, not being locally manufactured.

Clause 3d states that the discovery of a variant of an existing substance or process that does not enhance
efficacy significantly is not patentable. The clause attempts to discourage frivolous inventions.
2
http://ipindiaservices.gov.in/decision/00558-DELNP-2003-9637/558-delnp-2003%2025(2)%20decision.pdf

3.3 Some Issues Relating to the Validity of the Patent

The Indian IP policy has received wide criticism as it is seen to favour domestic manufacturers
(Kochhar, 2014; Gabble & Kohler, 2014). Both the patentability and compulsory licensing
criteria have been criticized, apart from cumbersome patenting procedures (OPPI, 2014).
However, many argue that the current patent regime increases the vulnerability of small and
medium enterprises (SMEs), a segment that dominates the Indian pharmaceutical industry but
cannot compete with big pharmaceutical companies (Agarwal et al., 2007). These enterprises
do not possess deep pockets to engage in technology transfers, marketing, new drug discovery,
and acquisitions.
While some provisions reported above are expected to enhance access and ensure that genuine
inventions get patented, some others may increase the vulnerability of SMEs and may be
detrimental to the promotion of inventive activity and innovation. For example, Section 13(4)3
under the patent act asserts that granting of a patent to the inventor does not automatically
ensure validity of the patent. The ambiguity in the law can prove detrimental to several small
Indian firms investing heavily in R&D.
The process of granting of a patent requires the application to go through a number of filters to
validate the patentability of the invention. Once conditions of novelty, non-obviousness and
industrial application are satisfied, the patent is granted. Like in many other countries the Indian
patent act has provisions for pre- grant and post-grant opposition, which some find quite
onerous (OPPI, 2014) but enhance the efficacy of scrutiny and, as discussed above, have helped
revoke patents. However, the presence of Section 13 (4) makes copying easy and stalls
infringement action. These combined with the delays in the judicial process work against the
inventor and undermine the technical and legal checks provided by the pre-and post-grant
opposition processes. Indeed, there have been cases that large firms have copied inventions of
small pharmaceutical firms in India adding significantly to the costs of protecting IPRs by the
inventive SMEs. The case of the 75ml Diclofenac Injection 4 by Troikka Pharmaceuticals

Clause 13(4) states that granting of a patent does not necessarily translate into validity of the

patent.
4

In the February, 2005, Troika pharmaceuticals filed for a patent for its invention: the 75ml

Diclofenac Injection, an anti-inflammatory drug. In the following years other companies filed
for patent applications presenting a formulation similar to that of Diclofenac injection.

provides a strong case, suggesting that Section 13 (4) can be dysfunctional. Notably the courts
in the US and Europe treat the patent valid and thereby curb frivolous challenges and facilitate
quick infringement action.
4. Innovations in the Indian Pharmaceutical Industry
This section discusses technology innovations and strategic responses by pharmaceutical firms
including changes in R&D expenditures and organizational innovations. Studies show that
organization level changes have backed the institutional change introduced in the form of a
changed patent regime. While Kale & Wield (2008) argue that the new regime has provided
India with the opportunity to exploit its advantage at reverse engineering and explore the
area of enhanced R&D in medical innovation, Haley & Haley (2012) suggest that the Indian
pharmaceutical industry has been adversely affected by the policy change.
4.1 Manufacturing Capability and ANDA Approvals
The dominant perspective, however, is that given the focus on process innovation during the
pre-TRIPS period , India acquired a competitive advantage in the production of quality bulk
drugs (Chittoor et al., 2008). This initial strength in imitative capabilities provided a fertile
ground to develop innovative capacities with changes in technology and policy (Kale &
Little, 2007). Consequently, the number of FDA approvals obtained by Indian pharmaceuticals
has greatly increased. Exploiting this opportunity with better production processes, India is
currently one of the leading generic drugs manufacturers. In fact, India manufactures eight out
of the ten blockbuster drugs (Agarwal et al., 2007). The process innovation driven building
of manufacturing capabilities, fostered by the pre-TRIPS regime, has helped Indian
pharmaceutical firms capture a significant share of ANDA approvals in the US. In recent years,
Indias share has been more than 40 per cent (Fig. 2) despite the increasing cost of compliance.
4.2 Trends in Patenting Activity
The post-TRIPS regime has witnessed greater investment in R&D (Jagdeesh and Sasidharan,
2014). A detailed econometric exercise has shown a shift to a stronger IP regime has resulted
in greater thrust in the R&D activity in the sector (see some estimates below) and domestic
firms have also increased patenting in India and abroad (Goldar et al, 2010). Within

Additionally, the grant process was delayed due to the procedural hurdles in the form of
measures for pre grant and post grant oppositions.

pharmaceutical R&D, there has been a significant increase in the focus on novel drug discovery
(Agarwal et al., 2007), although new dosage forms remain dominant among product patents.
The data on PCT applications (Figure 1) suggests that in anticipation of the change in the IP
regime in India in 2005, the top Indian pharmaceutical firms showed an increase in inventive
activity. In the subsequent period there has been a trend decline in PCT applications by these
pharmaceutical firms. Although, the reasons for this decline are not very clear, studies had
observed a global downtrend in the patent applications during the crisis period in the late 2000s
and beyond.

Fig 1: Trends in ANDA Approvals in the US for Indian Companies

Source: CRISIL (2014), Figure 7, p. 7.
(http://www.crisil.com/Ratings/Brochureware/News/V5-Pharma%20Article%20EdV3.pdf)

Figure 1: Total PCT Applications filed by top 10 Indian pharmaceutical companies

Source: Tyagi et al (2014), Fig 4.

The patent filing activity in the Indian Patent Office has increased dramatically in recent years
(Table 1). Overall, the top pharmaceutical firms seem to have engaged significantly more in
inventive activity in the post-TRIPS period. A comparison of the patenting activity of the top
eleven large pharmaceutical companies during the period 1999 - 2009 has brought out some
interesting patterns (Bedi, Bedi and Sooch, 2013). During 1999 - 2004, when product patents
in pharmaceuticals were not permitted, a much larger share of applications related to inventions
in the field of new/improved processes t o m a k e products than for the products themselves
(Figure 2). There has been an increase in the product patent applications filed by large
Indian pharmaceuticals companies after 2005 (Figure 3). The product related applications
include intermediates and formulations with maximum contribution from modified release
dosage forms. Besides, most top companies are increasingly using the PCT route for filing
patent applications. (Bedi, Bedi and Sooch, 2013). Patenting by SMEs in the sector is, however,
small although as we shall see below patenting is widely prevalent among start-ups in this
sector.
Table 1: Status of Patents Filed at the Indian Patent Office
Patent
2002-03
2005-06
2009-10
Filed
11466
24505
34287

2012-13
43674

Granted
1379
4320
6168
4126
Source: Compiled from Controller General of Patents, Designs, Trademarks, Annual Reports
2005-06, 2009-10 & 2012-13

Figure 2: Patent Applications Filed in India (1999-2004)

Source: Bedi, Bedi and Sooch (2013), Figure 1, p. 106

Figure 3: Patent Applications Filed in India (2005-2009)

Source: Bedi, Bedi and Sooch (2013), Figure 2, p. 106

Apart from New Drug Discovery a number of firms are also participating in Novel Drug
Delivery Systems (NDDS). Firms like Ranbaxy, Alembic and Dabur have been able to produce
NDDS formulations with great success and have as a result also entered into licensing
agreements with foreign players (Joseph, 2012). In an earlier study, it was shown that while
few pharmaceutical and biotech firms in India patent in the US, a significant proportion
(ranging from 48-59% depending on the estimates used) of these firms have product claims.
However, most (about 55%) of these applications are for incremental inventions including
those relating to bio-enhancers, new dosage forms, new use and NDDS (Basant, 2011). In
vaccine development, Rotavac Vaccine presents a salient example of indigenous innovation.
Rotavirus diarrhoea is a major cause of death amongst several children from poor socioeconomic backgrounds. Estimates suggest that rotavirus accounts for 37% of diarrhea related
deaths globally and 22% of diarrhoea related deaths amongst the under-five age group in India
(Bhaumik, 2013; N. Mehta, 2015). Pioneered by Indian pharmaceutical company, Bharat
Biotech, the three dosage vaccine displayed 56% higher efficacy and is available at a fraction
of the current cost. This provides an example of tropical and other diseases where the
magnitude presents a profitable opportunity to innovate and achieve economies of scale and
low cost solutions.
Despite the evidence of higher inventive activity, studies in the domain of biotechnology
provide divergent perspectives; while some argue
that the changed patent regime has
benefitted in the take-off of the knowledge intensive sector (Agarwal et al., 2007), others
suggest that it may not have contributed at all (Ramani & Maria, 2005). But all the studies
reviewed make a case for the immense potential the sector holds in delivering for the medical
needs of the future. The writings recommend focus on off-patent products such as biogenerics, vaccines and diagnostics arguing that reengineering is the true edge required for
establishing Indian biotech competence on an international stage (Ramani & Maria, 2005).
Besides, given the decentralization of drug development process, Indian firms are finding
niches to become part of the international R&D networks. (Basant, 2011)
4.3 Entrepreneurial Innovation
High penetration of mobile phones and the Internet in India has fostered a variety of
innovative medical devices and healthcare solutions. Many of these have been introduced
through start-ups as these increasingly provide profitable business opportunities and also have
a social impact by enhancing healthcare access. Many of these innovations currently lie outside
the ambit of TRIPS and once scalable, the products hold great potential to address a variety of
public health concerns.
While there is a fair bit of entrepreneurial activity in the healthcare provision, many IP
based biomedical start-ups have also been set-up in recent years. Unfortunately, there is no

systematic database of such start-ups. A recent survey of 50 such companies has brought out
two very interesting features5:
a. There is a fair bit of diversity among these IP based biomedical start-ups. Firms provide
diagnostics products, biologics & services, medical devices, small molecule drug
discovery, chemistry based or other drug discovery services and software based
services; and
b. Almost all (44 out of 50) either have some sort of IP or plan to have it in future. More
than 50% (27) of these firms have either filed for patents or have patents issued in their
name and an additional 20% (10) plan to file for patents. Interestingly, apart from
protecting their technologies from imitation, patenting is used by them to attract venture
capital, enhance reputation and improve their bargaining power in inter-firm deals.
Innovation possibilities in medical devices seem quite high. Available estimates suggest
that the market size of this sector is about

USD 2400 Million (Planning Commission,

2012a) and is growing at the rate of 16% annually (Pulakkat, 2014). About 75% of the
medical devices available in India are imported (Jaroslawski & Saberwal, 2013).
Entrepreneurship in this arena has targeted low-cost innovative solutions but in the absence
of the required resources (infrastructure, capital, and technical know-how), innovations in
non-drug based products remains gravely underinvested.
Broadly, innovative entrepreneurial solutions in healthcare have taken three forms; replacing,
supplementing and enabling the public sector or established private sector endeavours in this
space. Replacement aims to occupy the space inadequately covered by the public/private
sector; Aravind Eye Care that aims to target eye illnesses and blindness in cost effective
manner, is an example. Similarly, emerging telemedicine based solutions like eVaiday can
replace several health care initiatives. (https://www.evaidya.com/home.html#!/home)
Several new devices can supplement the services that are currently being provided by existing
healthcare systems or be enablers to make them more efficacious by supporting the paramedics,
frontline health workers and PHCs with technology. The innovation of Swasthya Slate6 (Health
Tablet) is a prime example that facilitates decentralized diagnosis. Similarly, a diagnostic
equipment, 3Nethra developed by a start-up, Forus is revolutionising remote decentralized
screening of a variety of eye ailments (http://forushealth.com/forus/). In the same vein,
innovations

such

as

Bio

sense

(http://www.biosense.com/)

and

Achira

These observations are based on a personal communication from Dr Gayatri Saberwal who
has undertaken this survey.
6

For details see, For details see, http://venturebeat.com/2014/11/18/this-indian-startup-coulddisrupt-health-care-with-an-affordable-diagnostic-machine//

(http://www.achiralabs.com/) are easy to manoeuvre diagnostic devices that aim to take testing
and diagnostic services to each household. While one innovation assists in non-invasive
haemoglobin level testing, the other is dependent upon micro fluids to diagnose the ailment.
Innovations such as a Windmill (http://windmillhealth.weebly.com/neobreathe.html) and
Embrace (http://www.embraceinnovations.com/) address the issue of infant mortality. Other
innovations include low-cost sanitary napkins7 , devices to monitor cardiac health8 12, low cost
health products (insulin) 9 etc.
Given the healthcare needs of the nation, such innovations have thus far targeted affordability
and ease of use. A critical challenge to popularizing the technologies is the cumbersome and
expensive process of accessing administrative approvals (Jaroslawski & Saberwal, 2013).
4.4 Strategic Responses and Innovations
Kale (2010) suggested that the new patent regime has led to organizational learning to provide
strategic response to the changed situation. The learning has been both internal, focused
towards developing stronger processes and external, whereby firms collaborate with foreign
partners.

Indian

firms have

employed

alternative strategies

that focus on

greater

internationalization which has taken two forms: facilitating greater inflow of FDI and
entering into joint ventures and acquisitions abroad. Kale and Weild (2008) divide Indian
pharmaceutical firms into three categories: alpha, beta and gamma. Alpha firms invest in
foreign subsidiaries; beta firms enter into joint ventures with foreign partners to leverage the
existing capacities in biotechnology capabilities and gamma firms acquire foreign firms.
Between, 1999-2004, the number of joint ventures rose from 7 to 20, and wholly owned
subsidiaries grew from 4 to 52 (Agarwal et al., 2007). International JVs and acquisitions have
focused on accessing marketing, manufacturing and R&D capabilities. Besides, the trend
towards joint ventures and acquisitions indicates a higher risk appetite.

Arguably, two

institutional changes had a noteworthy impact on the number of mergers and acquisition
undertaken by Indian pharmaceutical and drug industry; the liberalization policies undertaken
7

Aakar Innovation (http://www.aakarinnovations.com/) provides access to menstrual hygiene

to women in a low cost and environmentally friendly manner.
8
GEH's Cardiology Diagnostics' Indian (http://www3.gehealthcare.in/en) division called In
India for India with
the central objective of catering to the specific needs of medical practitioners in low-resource
scenarios (Jarosawski & Saberwal, 2012).
9
Bigtec Holdings is currently developing low cost insulin for sale in the Indian market
(Jarosawski & Saberwal,
2012).

since 1991 and the changes in the IP regime post TRIPS. (Mishra and Chandra, 2010) There
has also been significant consolidation within the Indian pharmaceutical industry with a lot of
M&A activity suggesting the need of large size to compete effectively in the new business
environment. (Table 2)
Table 2: Mergers and Acquisitions in Indian Pharmaceutical Industry
M&A-Completed Deals
Announced Total Value (US mil. $)
Year
15
2005
7
2006
9
2007
9
2008
5
2009
12
2010
7
2011
11
2012
9
2013
7
2014
Source: Compiled from Prowess Database

39.6
24.8
605.8
2336.8
197.6
3809.2
241.9
199.8
1859.7
406.1

Overall, the trend seems to be that Indian firms, at least the larger ones, are adopting strategies
to remain competitive in this knowledge intensive sector with a sharp focus on building
technological capabilities (Basant, 2011). Chittoor et al. (2008) argue that the Indian
pharmaceutical industry has adapted to greater indigenous growth and entry of MNCs. Besides,
in order to make up for the late-mover disadvantage, Indian firms have acquired absorptive
capacities and have begun importing technology and other inputs.

(Chittoor et al.,

2008).Guennif & Ramani(2012) provide a comparative analysis of catching up strategies in

Brazil and India under a national system of innovation framework. The authors conclude that
the system of catching up has adopted a three stepped process, by enhancing capabilities
towards production, re-engineering and finally new drug discovery.
R&D expenditures in the pharmaceutical industry have increased significantly while
expenditure on technology purchase has not increased. In fact, the share of technology purchase
expenditure as a proportion of sales has reduced and is less than 1% while that of R&D is more
than 5%, a remarkable rise. (Table 3) This trend indicates that an increasing number of
pharmaceutical firms are engaging in various aspects of research relating to drug development
and manufacturing. And probably foreign technology is now coming in through FDI rather
than arms-length technology licensing arrangements. This is now feasible given the liberal FDI
regime in the industry.

Table 3: Trends in R&D and Technology Purchase in the Indian Pharmaceuticals

Expenditure on
Expenditure on
Expenditure on the R&D
Year
Royalty/Technical
R&D (US Mil$)
purchase of
Expenditure as
per exchange rates
Knowhow (US Mil $) As
technical
knowhow
a percentage of
as of April 14, 2015
As per exchange rates as of
as a percentage of
sales
April 14, 2015
sales
3.8
1998-99
4.5
1999-00
5.1
2000-01
2
2001-02
2.8
2002-03
2.5
2003-04
2.2
2004-05
3
2005-06
3.2
2006-07
6.4
2007-08
8
2008-09
9.8
2009-10
8.6
2010-11
6.3
2011-12
6.4
2012-13
9.8
2013-14
Source: Computed from Prowess Database.

2.7
4
5.3
7.4
10.2
16.3
22.8
30.3
38.6
41.2
49.7
58.2
68.7
75.5
87.2
107.3

0.13
0.13
0.15
0.05
0.06
0.05
0.04
0.05
0.04
0.07
0.07
0.08
0.06
0.04
0.04
0.05

0.91
1.18
1.55
1.96
2.21
3.04
3.99
4.59
4.66
4.31
4.41
4.51
4.67
4.63
5.13
5.85

5. Public Policy Innovations

Healthcare access and innovations in healthcare

provisioning

are often not

seen as

complementary. We already discussed how entrepreneurial innovations along

with

product/process innovations can potentially be complementary. Given the possibility of

increases in healthcare costs with the new IP regime, policy innovations become necessary to
ensure affordable access to health care services. In this section, we discuss some of these health
policy related innovations as issues relating to IP policies have already been highlighted in
an earlier section.
A high percentage of the out of pocket expenditure incurred on healthcare can be attributed to
the purchase of drugs. The high price of patented drugs poses a barrier to universal access to
healthcare. Horner (2014) argues that TRIPS-compatible IP regime would not bring any
additional benefit to the population in the developing world

as increasing number of

pharmaceutical firms would be oriented towards lucrative Western markets with nations like
India becoming the pharmacy of the developed world.
Other factors that contribute to rising prices are: marketing practices adopted by
pharmaceuticals that lead to increased cost of treatment and weakening of the drug price control
order. The unholy nexus between doctors and pharmaceuticals may also reduce access to
healthcare. Marketing practices employed by several pharmaceutical companies aim to
influence doctors to prescribe drugs by certain companies (Mehta, 2015; Kalaskar & Sagar,
2012). The high cost of prescribed drugs and diagnostic services escalates the costs associated
with treatment and might even deter several households from seeking treatment for ailments.
DPCO that came into force in 1970 was instrumental in controlling the price of essential
drugs. The DPCO has the authority to monitor the prices of the drugs listed under the National
List of Essential Medicines. The price regulation is carried out by the National Pharma Pricing
Authority (NPPA). The DPCO monitored the prices of 75 drugs in 1995 and by 2002 only
30 drugs remained under price control. The argument supporting the trend maintains that due
to rising competition in the Indian drug market, the drugs were already priced very low and
hence were affordable (Chittoor et al., 2008). While others argue that more drugs should be
included under price control and in the essential drug list that have reference prices based on
the lowest price alternative (Selvaraj et al., 2012). In a policy reversal in 2013, DPCO brought
348 essential drugs within its purview (Department of Pharmaceuticals, 2014). The
intervention is aimed towards controlling the expenditure incurred upon medical bills and
demolish cost barrier to access healthcare.
Recognising the importance of keeping the drug prices affordable in the current context of the
liberalized economy and the new IP regime, a few policy changes seem noteworthy:
a. The recent legislation- Uniform Code of Pharmaceutical Marketing Practices (UCPMP)
- aims to control for the unethical and unwanted prescriptions and to ensure access to
health for all. The legislation is currently voluntary in nature and mandates doctors to
prescribe generic brand names. The current legislation is not a new development but is
another effort to control the unethical practices and alliance between Pharmaceutical
companies and doctors.
b. Introduced in the year 2008, Jan Aushadi scheme aims at making low-cost and quality
generic drugs available for sale to the general populations. The ambitious project took
off from the state of Punjab in Amritsar and at present 40 such stores have come up.

The Jan Aushadhi

scheme aims to address concerns associated with access,

availability, and affordability (Jayaraman, 2010; Kotwani, 2010).

c. c) Other state-based initiatives (Tamil Nadu Medical Services Corporation model,
Nirmalaya) have attempted to enhance access to healthcare through the strengthening
of supply side procedures for procuring and

providing high quality and low cost

generic drugs (Lalitha, 2008; Nautiyal, 2015). Additional state based inititatve such as
mobile medical units (http://healthmarketinnovations.org/program/deen-dayal-chalitaspatal-mobile-units; http://healthmarketinnovations.org/program/arogya-rath-mobilemedical-units-mmu-bihar) in Bihar and Madhya Pradesh offer the communites located
in difficult and remote topographies greater access to healthcare.

The Following Facts Figure Out in dairy

4.1 The Dairy sector in India has grown substantially over the years. As a result of prudent
policy intervention, India ranks first among the worlds milk producing nations, achieving an
annual output of 132.43 million tonnes of milk during the year 2012-13 as compared to 127.9
million tonnes in 2011-12 recording a growth of 3.5%. The anticipated milk production in the
country for the year 2013-14 is about 138 million tonnes. This represents a sustained growth
in the availability of milk and milk products for growing population.
4.2 Dairying has become an important secondary source of income for millions of rural families
and has assumed the most important role in providing employment and income generating
opportunities particularly for women and marginal farmers. The per capita availability of milk
has reached a level of 296.5 grams per day during the year 2012-13, which is more than the
world average of 294 grams per day. Most of the milk in the Country is produced by small,
marginal farmers and landless labourers. About 15.1 million farmers have been brought under
the ambit of 1,55,634 village level dairy corporative societies up to March 2013. The
cooperative milk unions have procured an average of 32.8 million kgs of milk per day during
the year 2012-13 as compared to 28.7 million kgs in the previous year recording a growth of
14.3%. The sale of liquid milk by cooperative sector has reached 23.7 million litres per day
during the year 2012-13 registering a growth of 3.7% over the previous year.
4.3 The efforts of the Department in the dairy sector are concentrated on promotion of dairy
activities including non-operation flood areas with emphasis on building up cooperative
infrastructure, revitalization of sick dairy cooperative milk unions and creation of infrastructure
in the States for production of quality milk and milk products. The National Dairy Development
Board (NDDB) continues its activities for overall development of Dairy Sector in Operation
Flood areas. The brief details of Dairy Development Schemes being implemented by this
Department are as follows:
4.4 Intensive Dairy Development Programme (IDDP)
4.4.1 The scheme Integrated Dairy Development Programme (IDDP) in Non-Operation Flood,
Hilly and Backward Areas was started in 1993-94 with 100% grants-in-aid basis. The scheme
was modified in March, 2005 and renamed as Intensive Dairy Development Programme
(IDDP) in March, 2005 with the following objectives:

Development of milch cattle

Increase milk production by providing Technical Inputs services
Procurement, Processing and Marketing of milk in a cost effective manner
Ensure remunerative prices to milk producers
Generate additional employment opportunities
Improve social, nutritional and economic status of residents of comparatively more
disadvantaged areas

4.4.2 The scheme has been implemented in hilly & backward areas and also in the districts,
which had received less than `50 lakh for dairy development activities under Operation Flood
programme. The projects are implemented by the State Cooperative Milk Federations/ District
Cooperative Milk Unions in view of their expertise & professionalism and the funds under the
revised scheme are released directly to the implementing agencies. There is no discrimination
of gender and class under the scheme. (The scheme has been subsumed under the new scheme

titled National Programme for Bovine Breeding and Dairy Development approved on
19.12.2013).
4.4.3 Since inception of the scheme, 114 projects have been approved. Out of these, 60 projects
are under implementation and 54 projects have been completed. 261 districts have been
covered in 27 States and a UT with a total cost of `716.40 crore upto 31.03.2014, including
four projects for Special Livestock Sector and Fisheries Package for the Suicide Prone
Districts in the States of Andhra Pradesh, Maharashtra, Karnataka and Kerala. A total sum of
`577.88 crore has been released to the concerned state govt and Milk Union/Federations for
implementation of projects up to 31.03.2014. These projects have benefited about 27.90 lakh
farmers in 38,817 villages in various States procuring over 38.91 lakh kgs of milk per day and
marketing milk of about 28.12 lakh litres per day. Milk chilling capacity of 34.38 lakh litres
per day and milk processing capacity of 42.90 lakh litres per day has been created under this
scheme.
4.5 Assistance to Cooperatives
4.5.1 Assistance to cooperative Scheme was launched as Central Sector Scheme in January,
2000 with the objective to rehabilitate the sick dairy cooperatives. It provides grants in aid on
50:50 sharing basis between Central and the State Government to loss making Milk Unions. It
has been implemented by NDDB and the revival plans of the sick Milk Unions are prepared
by NDDB in consultation with the concerned Milk Union. The rehabilitation plan is prepared
in such a manner that the net worth of the sick cooperative will become positive within a period
of seven years from the date of approval. (The scheme has been subsumed under the new
scheme titled National Programme for Bovine Breeding and Dairy Development approved
on 19.12.2013).
4.5.2 Since inception of the scheme, the rehabilitation plans for 42 Milk Unions have been
approved at the total cost of `289.64 crore with 50% Central share of `144.81 crore. Out of it,
an amount of `127.66 crore as Central share has been released under the scheme upto 31th
March, 2014. As on March, 2013, the rehabilitation period of seven years is over with respect
to 27 milk unions, out of these, 8 milk unions have achieved positive net worth while 6 milk
unions are earning profits but have not yet achieved positive net worth. 13 Milk Unions
continue to incur losses and have negative net worth. Of the remaining 15 Milk Unions, 11 are
likely to achieve positive net worth before completion of the rehabilitation period of seven
years.

4.6 Strengthening Infrastructure for Quality & Clean Milk Production

4.6.1 In order to improve the quality of milk & milk products in Domestic market and to
increase the export of milk products in the International market, the Department had started a
Centrally Sponsored scheme namely Strengthening Infrastructure for Quality & Clean Milk
Production in October, 2003 with the following objectives:
i. To provide infrastructure facilities for production, testing and marketing of quality milk &
milk products from farmers level to the point of consumption
ii. To create mass awareness by providing training to the milk producers and facilities for clean
milk production
iii. To improve the quality of raw milk produced by installation of Bulk Milk Coolers at village
level milk collection centres for immediate chilling of raw milk
4.6.2 The Pattern of funding is 75% Grants-in-aid for all components to profit making Milk
Unions (accumulated profit above `1.00 crore as on 31st March of previous financial year) and
100% Grants-in-aid for all other Milk Unions. The scheme has been implemented through the
District Level Coop Milk Unions/State Level Coop Milk Federations. (The scheme has been
subsumed under the new scheme titled National Programme for Bovine Breeding and Dairy
Development approved on 19.12.2013).
4.6.3 Since inception, the Department has approved 176 projects spread over 22 States and one
UT at a total cost of `346.94 crore with a Central share of `289.96 crore till 31.03.2014. Out of
total 176 projects, 111 projects have been completed and remaining 65 projects are at various
stages of implementation. An amount of `234.55 crore has been released upto the year 201314 (till 31st March, 2014) for implementation of approved projects. About 7.24 lakh farmer

members have been trained, 2,271 Bulk Milk Coolers (BMCs) with a total milk chilling
capacity of 47.47 lakh litres installed and 1,796 existing laboratories have been strengthened.
4.7 Dairy Entrepreneurship Development Scheme
4.7.1 Dairy Entrepreneurship Development Scheme (DEDS) was launched in September, 2010
with the objective for promotion of private investment in dairy sector in order to increase the
Milk Production in the country and helping in poverty reduction through self-employment
opportunities. This scheme is being implemented through NABARD which provides financial
assistance to commercially bankable projects with loans from Commercial, Cooperative, Urban
and Rural banks with a back ended capital subsidy of 25% of the project cost to the
beneficiaries of general category and 33.33% of the project cost to SC & ST beneficiaries. The
cabinet Committee of Economic Affairs (CCEA) in its meeting held on 12.12.2013 has
approved for continuation of the scheme with certain modifications and the budget provision
of `1,400 crore during 12th Plan.
4.7.2 Since inception, against the total release of `724.70 crore, NABARD has disbursed
`677.05 crore as back ended capital subsidy to the beneficiaries for setting up of 1,86,325 dairy
units upto 31st March, 2014.
4.8 National Programme for Bovine Breeding and Dairy Development (NPBB&DD)
4.8.1 After merger of four ongoing schemes namely Integrated Dairy Development Programme
(IDDP), Strengthening Infrastructure for Quality & Clean Milk Production (SIQ-CMP),
Assistant to Cooperatives (A to C) and National Project for Cattle & Buffalo Breeding
(NPCBB), a new Scheme titled National Programme for Bovine Breeding and Dairy
Development (NPBB&DD) has been launched on 27.02.2014. NPBB&DD has been provided
budgetary provision of `1,800 crore for implementation during 12th Five Year Plan.
NPBB&DD will have two components (a) National Programme for Bovine Breeding (NPBB)
and (b) National Programme for Dairy Development (NPDD). The Scheme has following
objectives:
4.8.2 National Programme for Bovine Breeding:
(a) To arrange quality Artificial Insemination services at farmers doorstep
(b) To bring all breedable females under organized breeding through Artificial Insemination
or natural service using germplasm of high genetic merits
(c) To conserve, develop and proliferate selected indigenous bovine breeds of high socioeconomic importance
(d) To provide quality breeding inputs in breeding tracts of important indigenous breeds so as
to prevent the breeds from deterioration and extinction
4.8.3 National Programme for Dairy Development:
(a) To create and strengthen infrastructure for production of quality milk including cold chain
infrastructure linking the farmer to the consumer
(b) To create and strengthen infrastructure for procurement, processing and marketing of milk
(c) To create training infrastructure for training of dairy farmers

(d) To strengthen dairy cooperative societies/Producers Companies at village level

(e) To increase milk production by providing technical input services like cattle feed and
mineral mixture etc.
(f) To assist in rehabilitation of potentially viable milk federations/unions
4.9 National Dairy Plan
4.9.1.1 The National Dairy Plan Phase I (NDP-I), a central sector scheme with a total outlay of
about `2,242 crore, is implemented by the National Dairy Development Board through End
Implementing Agencies (EIAs) in 14 major dairying states with the following objectives:

To help increase productivity of milch animals and thereby increase milk production to
meet the rapidly growing demand for milk
To help provide rural milk producers with greater access to the organized milk
processing sector

4.9.1.2 Major Activities being financed under NDP-I include:

Activity
Key Outputs
Production of High Genetic Merit (HGM)
Production of 2,500 HGM bulls
cattle and buffalo bulls
Import of 400 exotic bulls/
equivalent embryos
Strengthening of A and B graded
Production of 100 million semen
Semen Stations
doses annually in the terminal year
Pilot Model for Viable Doorstep AI
3000 MAITs carrying out 4 million
delivery Services
doorstep AIs annually by the
terminal year
Ration Balancing Programme
Coverage of 2.7 million milch
animals in 40,000 villages
Fodder Development Programme

Strengthening and Expanding Milk

Procurement System at Village level

Project Management & Learning

Production of 7,500 tonnes of

certified/truthfully labelled fodder
seed
350 silage making/fodder
conservation Demonstrations
23,800 additional villages and 1.2
million additional milk producers to
be covered
Monitoring, Learning and
Evaluation system 1for collection of
data, its analysis and interpretation

4.9.1.3 All the 14 major dairying states which are focus area of NDP-I and Uttarakhand have
complied/committed to a timeline for compliance to undertake key policy/regulatory measures
to create an enabling environment for successful implementation of NDP-I.
4.9.1.4 Till March, 2014, 171 sub project proposals (SPPs) have been approved with a total
outlay of `1,146.63 crore which includes nine projects of Project Management and Learning.

Out of the total approvals, `991.90 crore would be grant assistance and `154.73 crore would be
contributed by the EIAs.
4.9.1.5 The Department of Animal Husbandry, Dairying and Fisheries (DADF) has released
`266.79 crore for NDP-I till March, 2014, of which `139.79 crore was received during 201314. Till March, 2014, `204.55 crore has been released to EIAs for implementation of the sub
projects and undertaking Project Management and Learning activities.
4.9.2 Animal Breeding Activities
4.9.2.1 To meet the demand for disease free HGM bulls of different breeds for production of
high quality disease free semen doses, Progeny Testing (PT) and Pedigree Selection (PS)
programmes are being implemented under NDP-I. These programmes aim to produce/meet the
entire requirement of HGM bulls for frozen semen stations across the country by the end of the
project period. Existing semen stations are also being strengthened to produce high quality
disease free frozen semen doses.
4.9.2.2 Under PT programme, 13 sub projects from 10 states have been approved which are
expected to make available more than 2,000 bulls to semen stations across the country.
4.9.2.3 For conservation of indigenous breeds of cattle and buffalo, six sub projects from four
states have been approved for bull production through PS. These sub projects are expected to
make available about 360 bulls to semen stations across the country.
4.9.2.4 Nineteen sub projects for strengthening of semen stations have been approved from 12
states. These semen stations together are expected to produce more than 85 million doses per
annum by the end of the project.
4.9.2.5 Two sub projects for undertaking pilot model for viable doorstep AI delivery service
has been approved wherein 4,868 villages would be covered by 730 Mobile AI technicians. A
proposal to import 2,400 embryos of HF and Jersey has also been approved.
4.9.3 Animal Nutrition Activities
4.9.3.1 To ensure that milch animals produce milk commensurate with their genetic potential,
Ration Balancing Programme (RBP) and Fodder Development Programme (FDP) are being
implemented. Under RBP least cost balanced ration is formulated at the farmers door step by
the local resource person (LRP) using user-friendly software called Information Network for
Animal Productivity and Health (INAPH), developed by NDDB using locally available feed
resources. Under fodder development, field demonstrations of mowers, biomass bunkers,
silage making are being undertaken along with promotion of certified/truthfully labelled fodder
seeds.
4.9.3.2 Under RBP, 34 sub projects have been approved covering 12 states in which about 11
lakh milch animals in 14,000 villages would be covered by LRPs.
4.9.3.3 Twenty nine sub projects, approved under FDP spread across 12 states, provide support
for setting up five new seed processing plants, one crop residue enrichment and densification
plant, 985 demonstrations for silage making, 318 demonstrations for use of mowers and 60
demonstrations for use of bio-mass bunkers.
4.9.4 Village Based Milk Procurement System

4.9.4.1 To expand coverage/enable milk producers have greater market access, village level
infrastructure for milk collection are being provided to ensure collection of milk in a fair and
transparent manner including support for Bulk Milk Cooler, Data Processor Based Milk
Collection Unit, Automated Milk Collection Unit, Milk Cans, Milk Collection Accessories etc.
4.9.4.2 The approved 58 sub projects spread over 12 states are expected to cover more than
18,000 villages. About 5.4 lakh new members are expected to be enrolled in these sub projects.
4.9.5 Training and Capacity Building
4.9.5.1 Various training and capacity building programmes have been organized for farmers,
field functionaries and EIA personnel to upgrade the knowledge base and the skill sets required
for the successful implementation of the sub projects. It is expected that during the project
period about 20 lakh participants would be trained/oriented under NDP-I. These training
programmes are being organized either by NDDB or by EIAs.
4.9.6 Environment and Social Management
4.9.6.1 The project also focuses on inclusion of women, Scheduled Castes, Scheduled Tribes
and small holders across beneficiaries and functionaries. During preparation of the sub projects,
necessary consultations and disclosures are being carried out to identify environment and social
issues and mechanisms for its enhancement/mitigation.
4.10 Post Operation Flood and Consolidation of Cooperative Movement by NDDB
4.10.1 The National Dairy Development Board (NDDB), set up in 1965, has its headquarters
at Anand (Gujarat). NDDB was declared an institution of national importance and a statutory
body in 1987. NDDB promotes plans and organizes programmes for the development of dairy
and other agriculture based and allied industries along cooperative lines and also provides
assistance in the implementation of such programmes.

4.10.2 Strengthening the Cooperatives

4.10.2.1 During 2013-14, NDDB continued to provide technical and financial support to dairy
cooperatives in the areas of strengthening cooperative business, productivity enhancement,
quality assurance, building dairy infrastructure and for creation of national information
network. Up to 31st March, 2014, plans of about 100 dairy cooperatives with a total outlay of
`2,898 crore had been approved by NDDB under the Perspective Plan. Of this, NDDBs
financial assistance was to the tune of `2,329 crore. Due to non-utilization of the approved
financial assistance by dairy cooperatives, the financial outlay approved under Perspective Plan

stands revised to `1,952 crore, of which NDDBs financial assistance is to the extent of `1,479
crore.
4.10.3 Animal Breeding
4.10.3.1 Subsequent to the launch of NDP-I in April, 2012, a number of EIAs submitted SPPs
to Project Management Unit (PMU) of NDP-I for production of HGM bulls of various cattle
and buffalo breeds through PT and PS and for strengthening of their Frozen Semen Stations
(FSSs).
4.10.3.2 Till date, 13 PT projects for production of HGM bulls of different breeds have been
approved.
4.10.3.3 SPPs for development and conservation of Indigenous breeds of cattle and buffaloes
through PS of different breeds namely, Kankrej, Hariana, Rathi and Gir breeds of cattle and
Jaffarabadi and Pandharpuri breeds of buffalo which have been approved would be
implemented by Banaskantha Milk Union, HLDB, URMUL Trust, SAG and Maharashtra
Livestock Development Board (MLDB).
4.10.3.4 To meet the growing demand of quality frozen semen for providing quality AI
services, projects for strengthening of 19 A and B graded semen stations have been approved.
4.10.3.5 To meet the urgent need of bulls of exotic breeds, viz. Jersey and Holstein Friesian by
various semen stations, it is proposed to import bulls and embryos for production of breeding
bulls. Four participating agencies have been identified for production of bull calves from these
embryos. International Competitive Bidding procedures have been initiated for import of bulls.
4.10.3.6 Sabarmati Ashram Gaushala, Bidaj, Animal Breeding Centre, Salon and Rohtak
semen stations managed by NDDB Dairy Services (NDS) together produced about 191 lakh
doses of frozen semen during the financial year up to 31st March, 2014. During the same period,
the eight dairy cooperative semen production stations in the country produced another 141.7
lakh frozen semen doses (provisional).
4.10.3.7 NDDB organized a workshop where national and international experts shared their
experiences in implementing breeding programmes in their respective countries. NDDB also
organized a trainers training programme on typing of cattle and buffaloes for functional traits
to provide exposure to coordinators of PT projects on body typing of animals.
4.10.4 Animal Nutrition & Feed Technology
4.10.4.1 Promotion of bypass protein & fat supplements, area specific mineral mixtures and
calf starter continued during the year. Two more mineral mixture plants, each of 12 tonnes per
day capacity, were set up in Shahabad milk union in Bihar and Sabarkantha milk union in
Gujarat. During the year, one bypass protein plant of 50 tonnes per day capacity was also set
up in Patna, Bihar for production of bypass protein supplement.
4.10.4.2 NDDB has formulated a supplement to reduce the incidence of mastitis, which when
fed daily, four weeks prior to calving, to high yielding crossbred cows with a history of clinical
and sub-clinical mastitis in the previous lactation, resulted in reduction of mastitis in these cows
by 80 per cent, as confirmed by Mastect and California Mastitis Tests.
4.10.4.3 NDDB continued its field studies in various regions to evaluate the impact of feeding
a nutritionally balanced ration on enteric methane emission, milk production and metabolic

profile in lactating cows and buffaloes. Feeding a nutritionally balanced ration reduced
methane emission (gm per kg of milk yield) by 19 and 13 per cent in cows and buffaloes,
respectively.

4.10.4.4 Dairy cooperatives were assisted to produce about 5,340 tonnes of certified/truthfully
labeled fodder seeds of maize, sorghum, berseem, lucerne, oats, cowpea, pearl millet and
cluster bean for enhancing green fodder production. About 9.63 tonnes of breeder seeds of
improved high yielding varieties of fodder crops were arranged by NDDB from Indian Council
of Agricultural Research for dairy cooperatives.
4.10.5 Animal Health
4.10.5.1 NDDB has initiated a field pilot project on brucellosis control to create awareness on
the disease and the control measures to be adopted by the farmers in suspect cases of
brucellosis. The main components of the project are: (i) calf hood vaccination of female calves
(ii) identification of vaccinated calves through ear-tagging, (iii) sero-monitoring (iv) Milk Ring
Test (MRT) to identify positive villages, and (v) Rose Bengal Plate Test (RBPT) and ELISA
to identify individual positive animals.
4.10.5.2 The programme is for a period of five years with a total outlay of `169.06 lakh with
NDDB contributing `104.95 lakh.
4.10.5.3 Till March, 2014, 4,429 cattle and buffalo calves between 4 to 8 months of age have
been vaccinated since the commencement of the programme in April, 2013. Data relating to
each vaccinated animal has been captured in INAPH system.
4.10.6 Research and Development
4.10.6.1 Usefulness of FTA card for safe transport of clinical samples from field to the
laboratory is being investigated for diagnosis of brucellosis by real-time PCR. Among various
types of clinical samples genus Brucella could be identified most frequently from milk samples
when spotted on FTA cards.
4.10.6.2 Bovine Genital Campylobacteriosis (BGC) is caused by Campylobacter fetus
venerealis (CFV) and Campylobacter fetus fetus (CFF). A laboratory protocol for cultural
identification of BGC has been standardized. A real-time PCR has also been designed, which
detected DNA from reference strains of CFF and CFV. The assay is under further evaluation
for detecting the organism in clinical specimens.
4.10.6.3 To support diagnosis of Bluetongue (BTV) infection in cattle, a nested RT-PCR
targeting the highly conserved NS1 gene of the virus has been standardized on the lines of the
OIE protocol. The test has been validated with five serotypes of BTV (Serotypes 1, 2, 10, 16
and 23) and with a positive plasmid construct harboring the target gene (NS1).
4.10.6.4 A Loop-mediated isothermal amplification (LAMP) assay for detection of Infectious
bovine rhinotracheitis virus (BHV-1) from bovine semen is being validated targeting gB and
gC gene of the virus which can detect the virus in the semen of IBR sero-positive bulls.
Sensitivity and specificity of the assay is under evaluation.

4.10.6.5 The laboratory continued to provide diagnosis for bovine brucellosis, bovine
tuberculosis, paratuberculosis, IBR and BGC. Screening of extended bovine semen from IBR
sero-positive bulls for BHV-1 by real-time PCR has also been regularly undertaken.
4.10.7 Quality Assurance
4.10.7.1 NDDB assists dairy cooperatives and producer institutions through suitable
technological and capacity building interventions for improving their operations aimed at
ensuring quality and food safety of milk and milk products.
4.10.7.2 NDDB also participates in the development process of appropriate food regulations
and other regulatory matters relevant to dairy sector at the national and international level.
4.10.8 Milk Procurement and Marketing
4.10.8.1 During 2013-14, the average milk procurement by dairy cooperatives was about 344
lakh kg per day (provisional) as compared to about 335 lakh kg per day during the same period
last year, registering an increase of 2.6 per cent. During the same period, the cooperatives
marketed an average of about 247 lakh litres of milk per day (provisional) as against about 238
lakh litres per day, registering a rise of about 3.8 per cent over the corresponding period last
year.
4.10.9 New Generation Cooperatives (NGC) initiatives
4.10.9.1 The two producer Companies namely Paayas and Maahi, incorporated last year,
collectively operate in around 3,000 villages and procure on an average more than 9 lakh kg
per day from about one lakh members out of which 15 percent are women members and 54
percent are small holder milk producer members. Together they a have paid up share capital of
about `32 crore subscribed by their members and are likely to have a combined turnover of
about `1,300 crore for 2013-14.
They have also initiated supply of cattle feed & area specific mineral mixture to the milk
producers.
4.10.9.2 NGC operations continue in Andhra Pradesh, Uttar Pradesh and Punjab. Collectively,
they are procuring about 8 lakh litres per day from 1.4 lakh milk producers spread across about
4,500 villages.
4.11 Details of funds allocated and utilized under Dairy Development Schemes
Sr. No.
11 th plan
12th plan (for Year 2012-13)
12th plan (for Year 2013-14)

Fund Allocation (in crore)

582.00
543.30
570.00 (BE)/516.14 (RE)

Fund Utilized (in crore)

571.82
522.35
498.88

4.12 Creation of Milk Chilling facility

4.12.1 The Prime Minister Office is monitoring the creation of Cold Chain infrastructure in
Agriculture including Dairy Sector on monthly basis. Based on the information collected from
various State Government/ State Milk Federation, milk chilling capacity of 1,705 TLPD against
the target of 1,500 TLPD was created during the year 2012-13 and an additional Milk Chilling

capacity of 1,844 TLPD has been created against the target of 1,750 TLPD during the year
2013-14 in Cooperative dairy sector.
4.13 Deficit Monsoon and its Impact on Dairying
4.13.1 The impact of deficit monsoon on livestock sector will be manifested in many forms,
such as: scarcity of crop residues and other feed ingredients because of reduced crop production
and increasing crop failure; decline in reproductive efficiency; increase in incidences of animal
diseases particularly viral and protozoan in animals in milk and decline in milk production.
Reproductive efficiency among breedable bovines decline substantially due to deficiency of
green fodder and quality concentrates. The decline in milk production and reproductive
efficiency will be highest in crossbred cattle followed by buffaloes.
4.14 Milk Situation in the Country
4.14.1 Price trend
4.14.1.1 The yearly inflation rate of milk (base year 2004-05=100) as on March, 2014 was
9.47% as against 4.42% in the previous year. Most State Milk Federations and Metro Dairies
have increased the procurement and selling price of milk over the last one year and the average
increase is about `4.02 per litre and `3.73 per litre respectively. The increase in price is
attributed to the increase in input cost of milk production.
4.14.2 Steps taken to increase availability of milk in the country
4.14.2.1 The measures taken in relation to milk during last two years are as under:
i) Ministry of Commerce vide its notification No.31 (RE2012)/2009-2014, dated 04.02.2013
has exempted the export of processed and/or value added agricultural products from any
restriction/ ban even in the event of restriction/ ban on the export of basic farm produce
including milk products viz. casein & casein products (HS code 3501), butter and other fat
derivatives from milk, dairy spread etc. (HS 0405) and Cheese & curd (HS Code 0406)
ii) Department of Revenue vide its Notification No.30/2013-Customs, dated 21.05.2013 had
decided to continue the waiver on import of oil meals
iii) Department is regularly monitoring the milk situation in the country through review
meetings held bi-monthly
4.15 Delhi Milk Scheme (DMS)
4.15.1 Delhi Milk Scheme (DMS) was set up in 1959 with the primary objective of supplying
wholesome milk to the citizens of Delhi at reasonable prices as well as for providing
remunerative prices to milk producers. The initial installed capacity of Delhi Milk Scheme was
for processing /packing of 2.55 lakh litres of milk per day. However in order to meet increasing
demand for milk in the city, the capacity was expanded in phases to the level of 5.00 lakh litres
of milk per day. The Department has developed a web site http://dms.gov.in for use by related
users.
4.15.2 I.S.O.22000-2005 & I.S.O.14001-2004 - Certification
4.15.2.1 DMS has been awarded ISO 22000-2005 Certification (Raw milk procurement,
processing, packaging, storage & distribution of liquid milk and milk products) valid up to

05.05.2015 and ISO 14001 - 2004 certification (Environmental Management System) valid up
to 30.03.2016 by M/s IRQS, Mumbai.
4.15.3 Procurement of Milk
4.15.3.1 Delhi Milk Scheme has been procuring raw/fresh milk from the State Dairy
Federations of the neighbouring States of Punjab, Haryana, U.P. Rajasthan and Bihar and from
the Co-operative Societies/ Producers Companies & other companies. The details of Milk
procured by DMS from 2010-11 to 2013-14 is indicated below:
Year
2010-11
2011-12
2012-13
2013-14

Total Qty. of milk procured (in lakh per kg)

792.05
870.13
1077.60
485.32

Average/per day
2.17
2.38
2.95
1.33

4.15.4 Production and Distribution of Milk

4.15.4.1 Delhi Milk Scheme is processing liquid Milk (Full Cream, Toned and Double Toned)
and manufacturing value added milk products like Yoghurt, Ghee, Butter, Paneer, Chhach and
Flavored Milk for the supply to the citizens of Delhi.
4.15.4.2 DMS has a network of over 1,056 outlets (including All Day Milk Stalls). The DMS
supplies Milk to about 172 Institutions such as Hospitals, Government Canteens, Hostels and
Defence Units etc. In addition, DMS also supplies milk to the consumers through milk
distributors.
4.15.4.3 The milk booths are allotted to Ex-servicemen, retired Government/Semi-Government
servants, physically handicapped persons, widows, unemployed persons.
4.15.5 Performance /Capacity Utilization
4.15.5.1 The sale of DMS and custom packing of Mother Dairy milk by DMS taken together
has reached 2.73 lakh litres per day (LLPD) (Upto October, 2013). The custom packing of
Mother Dairy milk has been discontinued with effect from 01.11.2013 and custom packing for
Bihar Federation has been started with effect from 12.12.2013. The cost of production of milk
is as given below:
Year
2009-10
2010-11
2011-12
2012-13
2013-14

Capacity
Utilization (%)
73.10
65.20
62.00
60.20
54.00

Milk Sale
(lakh litres)
1,332.77
1,183.49
1123.62
1096.92
973.28

Variable cost
(` per litre)
19.86
21.75
27.08
25.52
30.70

Fixed cost
(`per litre)
3.05
3.24
3.40
3.60
4.25

Total cost
(` per litre)
22.91
24.99
30.48
29.12
34.95

4.15.6 Financial Outlay

4.15.6.1 Expenditure on all head of accounts including the expenditure on inputs like raw milk,
SMP, Butter, Butter Oil etc. and capital items is made from consolidated fund of Government
of India through annual budget allocation of Ministry of Agriculture, Department of Animal

Husbandry, Dairying and Fisheries. Sale proceeds of milk and milk products are credited to the
revenue account of the Government.
4.15.6.2 The details of funds allocated and expenditure incurred during 2012-13 and 2013-14
are given below:
Head / Scheme

I. NON-PLAN
II. PLAN
(including Civil/

B.E.

R.E.

370
2.00

366.64
2.00

2012-13
Expenditure incurred
340.83
1.56

B.E.
451.05
10.00

2013-14
R.E.
Expenditure
incurred(Prov.)
371.40
323.35
3.65
2.70

4.15.7 Reduction in the Staff Strength of DMS

4.15.7.1 In pursuance of the instructions issued by Ministry of Finance to down size the
Government machinery and to reduce the administrative expenses, DMS has reduced its
working Staff strength from 837 to 779 as on 31.03.2014.
4.15.8 Upgradation and Modernization of DMS plant
4.15.8.1 Presently, the Dairy plant is processing about 2.75 lakh litres of milk per day. During
the current financial year 2013-14, the Ammonia Diffusers, 4 TPH Boiler, 60 KL Milk Silo,
Poly pack Machines for milk and Chhach packing, 750 KVA Transformers and Atmospheric
Ammonia Condensers have been installed. The present capacity utilization of DMS is about
54%. Efforts are being made to utilize its capacity by increasing the sale of milk and milk
products leading to reduction in losses.
4.15.8.2 Imparting Computer training to DMS Employees
4.15.8.2.1 DMS employees have been imparted Computer training in batches of 20 persons for
20 working days by engaging an outside training agency and around 300 employees have been
imparted the computer training.