This paper has examined the gains to consumers from increased varietal imports of dairy products in India, which have increased from US$ 9.76 million in TE 1993 to US$ 45.57 million in TE 2016. Since demand for diversified dairy varieties is on the surge, the imports of dairy products have also surged by 3-times since TE 1993. The study has observed 6-fold increase in the number of varieties imported in the country during the study period. Considering a monopolistic competition framework and following a constant elasticity of substitution utility function, Indian dairy consumers have gained 4 per cent with respect to the total value of output from dairy industry during the study period. A comprehensive exploration of elasticity of substitution values at the most disaggregated HS 8 digit level has revealed that higher imports in product lines possessing high magnitude of elasticity of substitution (HS 04021010, HS 04059010, etc.) limit the varietal gains to consumers, whereas import diversification towards lesser substitutable fairy products like whey-based products and cheese and curds would enhance the gains to dairy consumers in the country.
Dairy import, monopolistic competition, varietal gains, import diversification
