However, the state ranked third in terms of milk production with over 1.1 million tonnes (mt) milk produced annually, it said.
"Milk production across India has grown at a significant rate of about 19 per cent during the aforesaid period with overall milk production crossing 121 mt mark as of 2010-11.
"But despite being the largest milk producer in the world, per-capita milk availability in India at 252 grams falls below the global average of 279 grams per person per day," a study titled 'Unlocking the growth potential of Indian dairy industry' conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) said.
New Zealand (9,773 grams), Ireland (3,260 grams) and Denmark (2,411 grams) are top three countries in terms of per-capita milk availability.
Andhra Pradesh, Rajasthan (28 per cent), Kerala (24.8 per cent), Karnataka (24 per cent) and Gujarat (23.7 per cent) are the top five states in terms of clocking high growth in milk production in the country.
"It is imperative for India's dairy industry to streamline its value chain processes and integrate the smallholder dairy producers into the processing value chain in order to improve the overall performance of the industry. More so as they possess inherent strengths like low production costs, lower liabilities and limited liquidity risk," noted the Assocham study.
However, lack of knowledge and technical know-how, poor access to support services, limited access to credit and poor milk quality together limit the ability of smallholder dairy producers to take advantage of market opportunities, it said.
Growing at a compounded annual growth rate (CAGR) of over four per cent, milk production in India is expected to rise to about 177 mt by 2019-2020.
The growth rate would help in meeting the projected demand of 150 mt by 2016-17 that has been envisaged in National Dairy Plan Phase-1," said D S Rawat, national secretary general of Assocham while releasing the study.
The increase in the income level of an average Indian is being accompanied by a change in the food basket as the monthly per-capita consumption expenditure on milk and milk products in both rural and urban areas has grown significantly, the Assocham study said.
Uttar Pradesh (UP) commands highest share of over 17 per cent in total milk production followed by Rajasthan (11 per cent share), Andhra Pradesh (nine per cent), Punjab (about eight per cent) and Gujarat (about eight per cent) with a combined share of over 53 per cent, it said.
Punjab has recorded highest per-capita milk availability of 937 grams as per latest available data followed by Haryana (679 grams), Rajasthan (538 grams), Himachal Pradesh (446 grams) and Gujarat (435 grams).
Andhra Pradesh has recorded highest growth rate of about 36 per cent in terms of improvement seen in per-capita milk availability followed by Kerala (21 per cent), Rajasthan (20 per cent), Karnataka (19 per cent) and Gujarat (17 per cent).
"Concentration of milk production in some pockets together with high cost of transportation has led to rising disparity amid states in terms of per-capita milk availability," noted the study.
There is an urgent need to build up strategies to increase competitiveness in all segments of dairy chain, input supply, milk production, processing, distribution and retailing, the Assocham study said.
"For promotion of the dairy sector in India, emphasis now needs to be more on how to involve and encourage the village population into proactively adopting dairy industry as a viable alternative to the agricultural activity."
Promoting dairy entrepreneurship, strengthening economic viability of dairy farms, increasing the link between rural production areas and urban markets and promotion of small quantity packaging to meet the needs of poor are certain key areas highlighted by the study.