The government has lifted ban on export of skimmed milk powder, SMP, to improve finances of dairy firms and help milk producers.

Earlier this month, the government had decided to lift export ban on SMP amid surplus availability of milk.

Directorate General of Foreign Trade, DGFT, said in a notification that the classifications of export and import items has been bifurcated and export of new entry namely skimmed milk powder has been made free.

The notification, however, said, exports of milk and cream, concentrated or containing added sugar or other sweetening matter, including whole milk powder, dairy whitener and infant milk foods are still prohibited.

AIR correspondent reports, the government had banned SMP exports in February 2011 to contain rise in domestic milk prices.

The dairy industry has been facing liquidity crunch as it could not make profit through sale of skimmed milk powder due to steep fall in domestic prices following surplus supplies.

Domestic prices of SMP have declined to 150 rupees per kg now against 190-200 rupees per kg in the same period last year. Milk production in India, the world's biggest producer, is estimated at over 120 million tonnes in 2011.