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Hyderabad dairy units shut for selling palm oil-based fake paneer

Food safety authorities in Hyderabad have suspended licences and ordered closure of three dairy manufacturing units found producing substandard paneer using palm oil as a substitute. The action was taken to protect consumer health and prevent further sale of adulterated dairy products.

LSN India · 5 September 2026

Hyderabad dairy units shut for selling palm oil-based fake paneer

The Food Safety and Standards Authority of India (FSSAI) has cracked down on three dairy establishments in Hyderabad after discovering they were manufacturing paneer using palm oil instead of legitimate dairy ingredients. The authorities suspended the food safety licences of the units and directed them to cease all business operations immediately, citing concerns over public health and consumer protection.

The use of palm oil in paneer production represents a significant deviation from food safety standards and labelling requirements. Paneer, a fresh cheese staple across Indian households and cuisines, is traditionally made from milk and should contain only authorised ingredients. The substitution with palm oil constitutes food adulteration and potentially misleads consumers regarding the product's composition and nutritional value.

The enforcement action reflects intensified scrutiny by food safety authorities on dairy and processed food manufacturing units across India. Such operations, often referred to as producing "analogue" products, have drawn regulatory attention in recent years as authorities work to maintain standards in the country's dairy sector and protect consumers from substandard or misrepresented foods.

The suspension of licences effectively prohibits the units from manufacturing, storing or selling dairy products until they comply with FSSAI regulations. The action serves as a warning to other food manufacturers about strict adherence to prescribed standards and ingredient specifications in their production processes.