China's domestic production currently stands at just over 24 million metric tonnes of liquid milk per annum and is growing by 20-25 per cent each year.

Yet it still requires significant imports to meet rapidly rising demand driven by increasing disposable income and the growing awareness of the nutritional benefits of dairy products.

For example, both production and sales of yoghurt and fermented milk drinks have been growing by over 40 per cent per annum over the last two years, with the market reaching 821,000 tonnes in 2004, according to data from Leatherhead Food.

The market is currently thriving, and manufacturers are introducing newproducts across China.

Currently the leading suppliers of imported milk are New Zealand, USA, Australia, France and Canada.

But India, the world's largest milk producer, is keen to benefit from the strong growth of its neighbour.

Amul has made an entry into key cities like Beijing and Shanghai through supply of skimmed milk powder to local dairies for conversion to ice-cream and yoghurt. It is also offering butter and cheese.

As part of its strategy to double exports in the next year, it is looking to increase supply to China.

"We are currently targeting exports of Rs15 crore to China in the first quarter of the year," Vyas, managing director of Amul, told the Times of India.

Amul curently has a presence in 32 markets including West Asian countries, the USA, Indonesia, Australia and Japan. It makes annual sales of US$672 million.