Fonterra chief executive Craig Norgate said the alliance would give Fonterra entry into a market of huge potential - tapping into the world's fourth-largest economy.
"India's total dairy market, at $50 billion, is one of the world's biggest," Mr Norgate said.
"Steady growth and liberalisation of India's economy has opened up attractive opportunities for investment in the country's dairy industry," he said.
New Zealand Milk managing director David Pilkington said domestic operators, via an informal market, supplied the largest sector of the Indian market.
"The $8.5 billion 'formal' market, which is growing at 9 per cent annually, is the target for Britannia and New Zealand Milk," Mr Pilkington said.
Britannia markets processed cheese, butter, dairy whiteners and ghee.
It has also expanded into liquid milks, which it is now selling in Delhi and Calcutta.
Mr Pilkington said the joint venture would further expand this product range, having identified strong growth potential in the milk and food service categories.
Fonterra previously announced joint ventures with Dairy Farmers of America, Nestle, Arla, and two Mexican dairy companies.
nzherald.co.nz/dairy
International Dairy Summit special report
