Though mixed farming has been a common practice in India since immemorial due to existence of complementary and supplementary relationship between crop production and animal production systems, dairy has gained a momentum due to commercialization and it is a rural income generating activity in India. Agriculture enterprise has not provided constant employment to rural people but dairy has not only provided gainful employment but also provided assured and regular income. The national income from animal husbandry has increased from 3 per cent in 1950 to 25 percent at present in GDP/GDPR of agriculture. Hence it is necessary to know the cost structure and profitability / sustainability of dairy to formulate policies for developing animal husbandry in India with particular reference to dairying which has high adaptability, feasibility, acceptability, profitability and sustainability in rural India. Dairying even provided regular income during the past 5 drought years. Hence an attempt has been made in this book to know the position of dairy animals in semi-arid regions affected due to drought during 5 past years. A cluster of villages were selected in Chittoor district of Andhra Pradesh, Kolar district of Karnataka and Erode district of Tamil Nadu. At each location, it covers 75 farmers, i.e. 15 households each in landless, marginal (1 ha); small (1-2 ha), medium (2-4 ha) and large farmer families. The cost and returns for Holstein Friesian, Jersey and mixed crossbreds vis-a-vis local cows and local buffaloes were studied and optimum feeding schedules (dry fodder equivalents and concentrate feed) at different milk production levels were also worked out based on the prevailing practices. The methods to minimize the cost of milk production for maximizing income were also suggested in the book.