Supplier development is a measure that contributes to improving economic and social performance along a supply chain, and it is a recent theoretical development warranting further empirical research. This paper on the dairy supply chain in India explores the role of supplier development strategies (SDS), related socially oriented capability development initiatives, and their impact on the performance of the supply chain. We conducted a multiple case study involving four cooperatives and eight private dairies wherein small and medium scale suppliers were a part of the supply chain. Results indicate that adopting SD is an established practice in dairy industry, which is used by the buyers as a strategy to manage social and societal issues. Findings indicate that such SD strategies result in developing the capabilities of suppliers to deal with related issues of social sustainability. Buying firms initiate indirect and direct SDS like supplier assessments, technical investments, financial assistance and logistic integration to ensure supply base continuity, which ultimately improves the economic and social performance. The findings offer insights into the role of SD as an effective strategy in building the capabilities and capacities and addressing social and societal issues and its impact on the performance of buyers and suppliers.