Lessons about job creation from Misty Milk
A recent visit to a dairy processing plant in Erode taught us more about job creation than all the TV debates on the Indian economy. Erode has been key to Tamil Nadu’s economic story for decades. Business owners mentioned multiple constraints holding them back: access to credit, skills gaps, regulatory complexity, tariff structures. To understand how these constraints operate in practice, we visited the main plant of Misty Milk, a mid-sized company in western Tamil Nadu. There, we found that even when ambition, demand, and infrastructure exist, structural barriers prevent growth. Yet the visit also revealed reasons for optimism about India’s employment challenge.
The constraints
Misty Milk has an impressive capital-intensive facility, with a sophisticated plant designed to handle far more milk than it receives. It is not a startup — with over ₹2,500 crore in annual turnover, it is a serious operation. It sources milk from about 2,000 dairy farmers. Yet management estimates that the plant could integrate supply from nearly 70,000 farmers without significant additional investment at the processing end. The constraint is not demand for dairy products, nor is it a lack of infrastructure. It is the limited ability of small dairy farmers to expand production because they lack access to affordable and reliable credit.
For small dairy farmers, purchasing additional cattle, ensuring consistent feed supply, investing in basic sheds, and accessing veterinary care all require upfront expenditure. Reserve Bank of India data show that small and marginal farmers, who account for over 85% of operational landholdings, receive a disproportionately small share of formal agricultural credit. The alternative remains informal borrowing at high interest rates, which raises risk and discourages investment. Misty Milk and its supplier farmers can grow together — but only if policy enables those who can create output, jobs, and income.
Misty Milk has ambitious growth plans, inspired by the success of giants such as Amul. Amul’s cooperative network today includes roughly 3.6 million dairy farmers. Daily milk procurement is close to 35 million litres, and the Amul group’s turnover has crossed ₹80,000 crore. These numbers reflect not just consumer demand or brand strength, but the power of aggregation combined with institutional support. Amul’s model reduces risk for farmers by ensuring predictable procurement and facilitating access to services and finance. The lesson is not that private firms must become cooperatives. It is that without solving credit constraints at the producer level, scaling up becomes nearly impossible. Misty Milk’s experience highlights how much untapped potential exists between India’s small private firms and its national champions.
Looking beyond dairy, Erode’s broader industrial landscape reinforces the same pattern. The district has long been a hub for small and medium enterprises (SMEs), particularly in textiles and manufacturing, built on dense clusters shaped by reinvestment, local networks, and market responsiveness. During a meeting with around 50 SME owners, there was no shortage of ideas or demand. But nearly all of them pointed to constraints that limit growth and employment. Skill shortages are emerging as production becomes more technologically demanding. Regulatory complexity and compliance costs weigh disproportionately on smaller firms. Tax uncertainty strains cash flows, while tariff structures raise input costs for manufacturers dependent on imports. Together, these constraints determine whether firms can scale and integrate into national and global value chains — the process through which jobs-intensive growth is created.
International evidence shows that SMEs account for a disproportionate share of net job creation, particularly in labour-abundant economies. The World Bank estimates that SMEs provide nearly 70% of global employment and are the primary source of new jobs in developing countries. When these firms are unable to grow, employment creation slows even if headline GDP numbers look strong. Capital-intensive investments may raise output, but they cannot absorb labour at the scale India’s demographics demand.
Demographic trajectory
The urgency of addressing these constraints is heightened by India’s demographic trajectory. Most projections suggest that India’s working-age population advantage will begin to narrow within the next two decades. If sufficient quality jobs are not created during this period, the opportunity will be lost. Large infrastructure projects and headline investment announcements, while important, will not by themselves absorb India’s labour force. Employment at scale will come from MSMEs, agro-processing, and value chains that link small producers to markets.
When SMEs are enabled to grow, they strengthen the entire economic ecosystem. Firms scale organically, smaller suppliers raise incomes sustainably, and workers find better jobs closer to home. India’s growth story won’t be written by its largest corporations alone — it will be written by millions of smaller enterprises, farmers, and workers who are ready to grow right now. In Erode, that readiness is already visible.
The question is not whether India can create jobs at scale. It is whether it will remove the constraints, starting with credit access, before the demographic dividend expires. We likely have two decades. The clock is ticking.
Salman Soz, Economist, author, and member, Indian National Congress; Anand Srinivasan, Expert in personal finance and member, Indian National Congress
Published – February 10, 2026 01:09 am IST
