Fonterra and India's Future Consumer have agreed to wind down their 50/50 joint venture.
The venture - Fonterra Future Dairy - was established in 2018 and has 22 employees.
"The last few years have been challenging for the joint venture with Covid-19 causing significant disruption to the Indian market," Fonterra said in a statement.
Despite this, Fonterra said the joint venture had delivered some important initiatives, including the launch of the Dreamery brand - a range of consumer products made using Indian milk - and distribution of Fonterra's Anchor Food Professionals products for the foodservice sector.