Wellington, July 27 NZPA - A New Zealand company is reportedly in the running for a joint venture setting up dairy farms in India -- the world's biggest milk producer -- with the Indian Farmers Fertiliser Cooperative (Iffco).

The Indian company is close to setting up a dairy project jointly with an overseas partner -- either an American or New Zealand company -- the Economic Times reported.

The foreign firm would be an equity partner in the project that would require an investment of 10 billion rupees ($NZ291 million), according to Iffco managing director US Awasthi.

"We will begin with 6000 high-breed cattle stocks and a processing capacity of one million litres of milk a day," he said.

India produces 108 million tonnes of milk a year -- most of it consumed in the domestic market -- and the demand for milk is projected to rise to 180 million tonnes by 2021.

The country's National Dairy Development Board (NDDB) has chalked out a 15-year National Dairy Plan (NDP) requiring investment of 17 billion rupees to lift bovine productivity and milk production.

Iffco is developing a special economic zone at Nellore in Andhra Pradesh, for 1000 hectares of agricultural production, including dairying, with farmers owning part of the equity in the projects and co-operatives distributing the products.

A spokeswoman for Fonterra -- which until recently had a joint dairy venture in India with biscuit company Britainia -- said it was not involved in the Iffco project.