The Centre is considering re-allowing casein exports, banned early this year. However, the lifting of export ban could be linked to import of skimmed milk powder (SMP), sources said.

Dairies could be allowed to import 2.5 kg of SMP duty-free, in return for export of one kg of casein, a protein compound extracted from milk. About 12 litres of milk is required to produce one kg of SMP, whereas one needs 30-35 litre of milk to make a kg of casein.

The industry is abuzz with the Government's proposed move. “Exports should be allowed, provided they are linked to imports of SMP,” said Mr Kuldeep Saluja, Managing Director of Sterling Agro Industries, which manufactures Nova brand of dairy products such as ghee and butter oil.

However, the Government should impose riders stating that the imports of SMP should be within a specified time-frame of two to three months, Mr Saluja said. “The imports should be time-bound. If the import window for SMP is wide open, then it could lead to scarcity of milk,” Mr Saluja added.

The Government had banned exports of casein and milk power on February 18 after dairies in the country, particularly north, experienced a shortfall in milk procurement. India's casein exports are around 10,000 tonnes and are mainly destined to countries such as the United States, Germany and Korea.

Major exporters include Baramati-based Schreiber Dynamix Dairies Ltd, north-India based VRS Foods, Bhole Baba Dairy Industries, Modern Dairies and Industrial Progressive (India) Ltd and Kohinoor Foods.

Casein is used as a protein dietary supplement and in making cheese. It is also used for industrial applications in paints, glue, plastic and fiber.

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