Milking the Green Revolution: Transforming dairy packaging for a sustainable future

India's dairy industry's reliance on plastic packaging and its environmental impacts are massive. Innovative, sustainable alternatives like bioplastics, recycled materials, and smart packaging can foster a transition towards eco-friendly, scalable packaging solutions for a sustainable future

By ISB

Published: May 21, 2025 02:56:02 PM IST

Conventional packaging poses significant environmental challenges, annually generating large volumes of low-recyclable plastic waste of approximately 3.5 million tonnes. Image: Shutterstock

The Indian dairy industry, the largest in the world, plays a vital role in ensuring food security while contributing significantly to packaging waste. With an expected market of ₹30 lakh crore by 2030, the sector relies heavily on plastics and multi-layer laminates for product safety and shelf life. The rising environmental concerns and tightening regulatory frameworks demand a shift towards sustainable packaging. This blog intends to explore the current packaging practices in the Indian dairy sector, identify the key challenges to adoption, highlight emerging innovations, and offer future recommendations to transition towards eco-friendly, scalable packaging solutions that balance cost and sustainability.

Understanding the Current Landscape

The Indian dairy industry is divided between the organised and unorganised sectors. The organised sector, comprising approximately 30–35 percent of the market, includes large cooperatives like Amul and Nandini and private corporations such as Nestle and Hatsun. The segment deals in value-added products like cheese, yoghurt, flavoured milk, and ice cream, operating under regulated frameworks in compliance with Extended Producer Responsibility (EPR) norms and food safety standards. The unorganised sector, accounting for around 65–70 percent, comprises local milkmen, smallholder dairies, and roadside vendors. It primarily distributes raw or minimally processed milk with minimal or no formal packaging, contributing to challenges in packaging waste management and regulatory compliance.

Reliance on Conventional Packaging Formats

These sectors heavily depend on conventional packaging materials to ensure product safety, shelf life, and affordability. Low-density polyethene (LDPE) plastic pouches dominate urban milk distribution, accounting for nearly 75 percent of the market. High-density polyethene (HDPE) bottles are widely used for flavoured milk and probiotic beverages, offering sturdiness and consumer convenience. At the same time, Tetra Pak cartons provide extended shelf life for ultra-high temperature (UHT) milk and fruit-based drinks. Still, they are difficult to recycle due to their multilayered composition.

Environmental and Economic Impact

Conventional packaging poses significant environmental challenges, annually generating large volumes of low-recyclable plastic waste of approximately 3.5 million tonnes. Limited circularity is adopted due to a lack of infrastructure and recycling gaps under the current regulatory landscape, low consumer education, and lack of segregation and collection systems at the regional level, resulting from waste management issues. LDPE and HDPE are heavily dependent on fossil fuels with high CO2 footprints. Life cycle assessments reveal that LDPE pouches emit ~7.5 kg CO2 per 1000 units, while HDPE bottles emit ~6.8 kg and Tetra Paks ~5.5 kg. While conventional packaging remains cost-effective (₹1–₹5 per unit), its hidden ecological costs, viz. soil (microplastic), water and air pollution, carbon emissions, and regulatory risks, are becoming increasingly unsustainable, urging a shift toward greener alternatives.

Also read: Joy of unboxing: Packaging's powerful pull for branding, bonding and beyond

Challenges in Adopting Sustainable Packaging

Despite increasing global and domestic momentum toward eco-friendly solutions, several barriers inhibit India's widespread adoption of sustainable packaging. The immediate hurdle is the cost disparity between conventional and sustainable packaging materials. For example, Low-Density Polyethene (LDPE) plastic bags cost approximately ₹1.25 per unit, while paper-based gable top cartons, a sustainable alternative, cost ₹5.00 per unit. For a production volume of 40 lakh units per day, the total daily cost for LDPE bags is ₹50 lakh, while sustainable paper cartons incur a staggering ₹2 crore, a fourfold increase. This ₹1.5 crore daily cost difference makes sustainable packaging financially unfeasible for many businesses without government subsidies or market incentives. The challenge is compounded by infrastructure gaps, especially in waste management. In India, inadequate collection, segregation, and recycling facilities diminish the effectiveness of sustainable packaging, which often ends up in landfills regardless of its compostable or recyclable design.

Consumer resistance is also a barrier driven by price sensitivity and a lack of awareness. Many consumers will be unwilling to pay a premium for eco-friendly packaging, particularly in low-margin sectors like food delivery or retail. Misconceptions about the strength or reliability of sustainable materials also contribute to low adoption rates.

On the regulatory side, inconsistent enforcement and ambiguous definitions of terms like "biodegradable" and "compostable" deter businesses from adopting green alternatives. While India's EPR framework exists, its uneven implementation across states creates uncertainty. Meeting EPR obligations, such as setting up collection systems, can be costly. The lack of integration of India's vast informal waste sector limits the' effective recycling and recovery of sustainable packaging materials.

Despite these challenges, the environmental benefits of switching to sustainable packaging are significant, as it can reduce daily CO₂ emissions by over 57 percent. However, meaningful adoption will require a coordinated response that aligns incentives, public awareness, infrastructure investment, and standardising policy across jurisdictions, which is essential for scalable adoption in India.

Innovations and Sustainable Alternatives

There could be multiple innovations, and sustainable alternatives can be implemented at various stages.

Bioplastics and Plant-Based Packaging: Bioplastics, such as polylactic acid (PLA), are increasingly considered an alternative to traditional petroleum-based plastics. PLA derived from renewable biomass sources like cornstarch or sugarcane offers the advantage of being compostable under industrial conditions, helping reduce dependence on fossil fuels and potentially lowering greenhouse gas emissions. PLA has certain drawbacks, such as requiring specific conditions to biodegrade effectively and may not break down in natural environments or standard landfills. The cultivation of biomass for PLA raises ethical and environmental concerns, including competition with food crops and land-use impacts.

Recycled and Recyclable Materials: Recycled polyethene terephthalate (rPET) is gaining visibility in food packaging due to its ability to lower virgin plastic usage and reduce carbon footprint. It is particularly useful in the bottle manufacturing industry and can be recycled multiple times without causing a significant loss of quality for the bottled product. Materials like mono-material laminates are made from a single type of polymer that enables easier recycling by avoiding challenges posed by multi-layer composite materials. These materials align with the circular economy principles and facilitate better waste segregation and reprocessing. The adoption of such materials, though, faces several challenges, including stringent quality control standards during production, inadequate infrastructure for collection across India and recycling, and limited consumer awareness on how to manage this.

Smart Packaging Solutions: Smart packaging integrates advanced technologies like time-bound temperature indicators, freshness sensors, and QR codes for product traceability, which enhances food safety, extends shelf life, and reduces waste. These technologies assist in monitoring product conditions in real time and alert stakeholders throughout the product's entire journey. However, high costs, scalability issues, and complexity hinder widespread adoption, particularly in price-sensitive and rural markets in India, and pose some challenges to implementation.

Recommendations for a Greener Future for the Dairy Industry

The two major stakeholders, the government and industry, must take several steps to attain a greener and more sustainable packaging future for the dairy industry.

The first and foremost step is to increase the investment in the Research and Development of innovative packaging material at the regional level. To understand the delivery challenges of dairy products from collection centres to factories to consumers, the government should bring communities, industry and scientists to the same forum. This can trigger new ideas for biodegradable packaging based on plant-based resources, enabling reduction of packaging waste, higher shelf life and safe delivery of dairy products.

Further, the government should emphasise launching mass-level educational programs and promotions to adopt and strengthen circular economy practices among school children, communities, and various forums for increasing resource efficiency. The government can incentivise the industry through tax breaks by adopting take-back systems for milk packaging material, securing it, and reusing it for future milk deliveries. This will reduce the large number of milk packages dumped daily in the landfills and act as a breather for the city's waste management systems.

Evidently, many consumers are still unclear about the negative environmental impact created by their packaging choices, and educating them is necessary. Proper ad promotions and community outreach programs should be initiated by industries backed by government policies, enabling an environment of packaging material use that moves towards a sustainable future.

Transitioning to sustainable packaging is a pivotal step in India's dairy sector, which is one of the world's largest dairy producers with a vision to improve milk quality. The Indian dairy industry, a significant contributor to plastic pollution, urgently needs to reconsider its conventional packaging practices. Embracing eco-friendly packaging solutions offers benefits that extend beyond reducing plastic waste. They also facilitate the emergence of novel economic opportunities, mitigate long-term costs, and support the creation of green jobs.

Furthermore, adopting eco-friendly packaging aligns with the global consumer demand for environmentally responsible products and enhances brand value. Ushering in a green packaging revolution requires collaborative efforts from industry leaders, policymakers, and consumers. By embracing green packaging, the dairy sector can contribute to a healthier planet and secure a more prosperous future.

Acknowledgement: This article is based on research conducted by Indian School of Business (ISB) students on the issue of sustainability in the dairy industry. The study was part of the Action Learning Project of the Emerging Leaders Programme at ISB's Executive Education.

Anjal Prakash is a Clinical Associate Professor (Research) and Research Director at Bharti Institute of Public Policy, Indian School of Business (ISB). He teaches sustainability at ISB.

Sreenath Subramaniam has 13+ years of experience in manufacturing R&D and digital transformation. He is the Technical Project Manager at the Foundation for Science, Innovation, and Development, IISc, Bangalore.

Dushyant Tiwari holds a Professional Certification in Energy Innovation & Emerging Technologies and a bachelor's degree in chemical engineering. He has over 18 years of hands-on experience developing international markets, formulating strategic initiatives, and executing business plans.
Senthilkumar Suthanandam has over 23 years of experience in retail sales and FMCG marketing and is currently working as a senior general manager at Hatsun Agro Products Ltd.
Dilip Bharalawala is a senior finance leader with 20+ years of experience in the cement industry, currently serving as Vice President, Finance at Nuvoco Vistas Corp. Ltd.

[This article has been reproduced with permission from the Indian School of Business, India]