Dairy giant Fonterra has confirmed it is in talks with an Indian farmers' cooperative in setting up a dairy farming operation in India.
Fonterra's global trade managing director, Kelvin Wickham, says the exploratory talks with the farmers' cooperative, Iffco, are in the early stages and no agreement has been reached.
He says the Indian dairy market is the world's largest and is growing rapidly and Fonterra would like to mirror what it has done in China with securing a high-quality, traceable milk supply there.
India's Economic Times newspaper says the venture would involving milking up to 40,000 cows to produce top-quality milk to premium customers.
The newspaper says Fonterra would have a 30% stake in the farming operation which would require the Indian Government to relax a 30-year-old ban on the importation of milking cows for commercial herds.
Meanwhile, Fonterra dairy exports were at centre of protest action in India in July where a farmers group and members of a Hindu nationalist party staged rallies and attacked local milk tankers.
The Indian Dairy Development Board had requested 30,000 tonnes of milk powder and 15,000 tonnes of ghee, or butter oil, from Fonterra to make up a shortfall in its local supply.