Gujarat Cooperative Milk Marketing Federation (GCMMF), makers of Amul-branded dairy products, is set to invest INR2.5bn ($40m) in West Bengal, a north eastern state of India, to set up the biggest dairy processing plant in the region.

GCMMF MD RS Sodhi said: "We have received 16 acres a few kilomteres away from Kolkata and necessary approvals from the West Bengal government."

According to Sodhi, the proposed unit will be ready within 15 months and will be equipped with the power to process 10-15 million litres of milk every day along with other dairy products including butter, yoghurt, lassi and ice cream too (using vending carts).

The venture could attract more followers from the dairy sector into Mamta Banerjee-ruled West Bengal state, which has begun opening arms to India’s bigwigs.

The GCMMF expansion coincides with Kolkata-based ITC’s plans to dive deep into the dairy business keeping Munger, Bihar as its base. A churning battle seems on the cards with ITC all set to lock horns while Amul plans to dig in its heels.

Following this, GCMMF intends to spend the next three years by expanding existing units and investing INR500bn ($800m) for the launch of similar greenfield units at Lucknow, Kanpur and Faridabad. Currently, in India, Amul has 51 processing plants, with 40 of them in Gujarat itself, having a processing capacity of 230 million litres of milk per day. This number is expected to touch 320 million litres per day over the next three years.

Dismissing rumours about West Bengal-produced milk being of bad quality, Sodhi said: "Our experience in the last eight years show milk produced in the state is one of the best, and even better than Gujarat. We have been procuring milk locally for the last three years from the state and processing it in third-party plants. But now we feel there is a need to have our own plant. Currently, milk procured and processed outside Gujarat is 15% of our total capacity, which will increase to 20% in the next 2-3 years."