The cow is sacred in Hinduism for several reasons:

1) Milk - the cow's use as a milk-providing animal is very important. Indian religions have long considered milk as something special and very nutritious - it is used widely in sweets and prepared on special occasions. It is also more expensive! The cow is given respect for this, because it generously gives humans milk which is intended only for its calves. In olden days and even today in some areas, the calves are first allowed to take the milk each day and only after that does the milkman take the milk from the cow.

2) Work - oxen are used in farming (tilling and plowing) and work (pulling), so they are valuable for food and livelihood of a culture that originally subsisted on farming. Indian religions teach that animal life is sacred so that no animal is to be killed for food if you can find something else to eat. Thus cows are not killed for food but are instead used for work.

3) Reincarnation - belief in reincarnation implies that souls are reborn as other beings. Most commonly, humans are considered the highest level of incarnation. But gods have been known to incarnate as animals (the Buddha is said to have taken the form of a rabbit, cat, etc., and many Hindu gods and goddesses have taken cow forms), and that tradition of considering every being as infused with a soul and possible godly incarnation continues.

3) Religion - the cow in Hindu mythology is seen in a number of places. Each god has an animal companion as a mode of transport. While Vishnu rides on an eagle and Brahma has a peacock, the god Shiva (destroyer of evil) rides an ox called Nandhi. The incarnation of Vishnu, named Krishna, was a cowherd, and the cows responded lovingly to his flute-playing. In another instance, a sacred cow called Kamadhenu is said to have given its milk to Lord Vishnu as well.

All these aspects, in combination with a little superstition and continued tradition have contributed to the popular view that the cow is sacred in Indian religion and culture.

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The Philosophy of Hinduism