India now has indisputably the world's biggest dairy industry. The dairy sector in the India has shown remarkable development in the past decade and India has now become one of the largest producers of milk and value-added milk products in the world. Tabular analysis was used to assess the trade performance of dairy products in India. From the results, India became a net exporter of dairy products till 2009. On the other hand the rapidly growing domestic demand led to increase in India’s dairy imports which is due to change in consumer taste and preference, rise in income, etc. The study was also undertaken to find out the direction of trade of dairy products from 2007-08 to 2012-13 using Markov Chain Analysis. From the transition probability matrix for exports of dairy products, it was observed that India could not retain its previous export of dairy products to Bangladesh, Egypt A Rp, Saudi Arab and also other countries during the study period except U Arab Emts. From the transition probability matrix for imports of dairy products, it was observed that India could not retain its previous import of dairy products to United States, France, Netherland and Italy during the study period. However, Netherland has higher probability to gain 21 per cent of the market share of Italy alone. At present, Imports of dairy products exceeds than exports in India was due to the quality of milk produced in the country falls below the internationally accepted standards. Development of awareness, mindset and commitment on improving the quality of milk is necessary.