Domestic dairy industry and commodity market of less developed countries (LDCs) is vulnerable to international competition because of the prevalence of heavy subsidies on production and exports of dairy commodities from developed countries. With lower levels of market protection and faster economic liberalisation, the recent Indian experience suggests that liberal import policies can gloom the competitiveness and hence growth prospects of domestic dairy industry. The option is either to push hard for a level playing field using suitable WTO forum or to enhance the domestic industry competitiveness through suitable interventions. The former seems to be more relevant given the WTO anti-dumping and complaint redressal provisions by a cohesive regional approach.