GST rates cut on dairy products in India - Farmers and consumers will get big relief package
New Delhi - There has been a big change in the dairy sector of India, where the GST Council has decided to reduce tax rates on major dairy products. Appreciating this decision, major players of the dairy industry have called it a historic step. This will not only increase the income of lakhs of farmers, but common consumers will also get milk products at cheaper prices. It is estimated that this change will save Rs 11,400 crore annually, which will strengthen the economy. If you are fond of dairy products like cheese, ghee, butter or ice cream, then this news is good news for you. Let us understand in detail about this decision, how it will work and what impact it will have.
What does GST reduction on dairy products mean?
The GST Council has given a big relief package to the dairy sector in its recent meeting. Earlier, many dairy products used to attract 12% or more GST, but now it has been cut drastically. For example:
- GST on basic food items like paneer has been reduced to 0%.
- Tax on ghee, butter, cheese and ice cream has been reduced from 12% to 5%.
- Similar exemptions have been given to UHT milk, milk-based drinks and other packaged dairy products.
This decision has come at a time when inflation is making the common man's thaali expensive. The government believes that this will make dairy products cheaper, increase demand and farmers will get better prices. The dairy industry is an important part of India's economy, where about 8 crore farmers are involved. This sector is the world's largest milk producer, but there are many challenges due to being unorganized. The GST cut will give a boost to the organized sector, which focuses on quality and packaging.
Reaction of major companies - from Amul to Mother Dairy
The giants of the dairy industry have welcomed this decision wholeheartedly. Amul, which is India's largest dairy brand, called it a game-changer for farmers. Amul's Managing Director Jayen Mehta said that with this change, more than half of their products will now come under the zero GST category, while the rest will be taxed at just 5%. He stressed that the company will transfer a large part of this saving to the farmers, which will increase their income. According to Mehta, the cheaper prices will increase consumer purchases, which will ultimately benefit the entire sector.
Indian Dairy Association Chairman and former Amul MD R.S. Sodhi also expressed his happiness on social media. He thanked Prime Minister Narendra Modi, Finance Minister and GST Council and said that this decision will directly benefit 8 crore farmers and 1.45 billion consumers. Sodhi estimated annual savings of Rs 11,400 crore, which will accelerate the growth of the dairy sector. He called it a reform that was pending for a long time and has now been implemented.
Manish Bandlish, Managing Director of Mother Dairy, which is a major player in Delhi-NCR, called this decision a progressive step. He said that packaged dairy products will now become more affordable, which will increase their reach in every household. According to Bandlish, demand is increasing rapidly in categories like ice cream, cheese and milk drinks, and GST reduction will further strengthen this trend. He promised that Mother Dairy is committed to passing on this benefit to consumers, so that safe and nutritious products can reach more people. Bandlish also said that this will provide a better market to the farmers, which will boost their income.
Bhuvaneshwari Nara, Vice President and MD of Heritage Foods, a leading South Indian company, called it a timely decision. He said that bringing cheese to the zero tax bracket and ghee-butter to 5% will affect every Indian household, as these are everyday needs. Nara announced that Heritage Foods will give full benefit of this discount to the customers, which will bring enthusiasm in the market during the festive season. The company, along with its distributors and retail partners, will manage this change smoothly and increase production capacity if needed.
How will farmers benefit?
Dairy farming is the backbone of the rural economy in India. GST reduction will allow companies to sell products at cheaper rates, which will increase demand. More demand means buying more milk from farmers, and giving better prices. Cooperative models like Amul already have profit sharing with farmers, and now it will increase further. Experts believe that this will lead to a shift from the unorganized sector to the organized sector, where farmers get regular income and support.
For example, if the price of ghee is reduced by 10-15%, consumers will buy more. This will increase the demand for milk, and farmers will be able to earn more. Also, with the increasing popularity of packaged products, farmers will get a better market for value-added products. This move of the government is also important in the direction of Make in India and Atmanirbhar Bharat, as dairy exports can get a boost.
What changes will come for consumers?
The biggest benefit for the common man is the reduction in prices. Paneer, which is now in zero GST, will become cheaper. The 5% tax on ghee and butter will also reduce their prices. Products like ice cream and milk drinks will now be more affordable, especially for middle class families. This discount will be even more attractive during the festive season, as the demand for dairy products is at its peak during festivals.
Apart from this, the shift towards packaged products will provide better quality to consumers. The problem of adulteration is common in the unorganized market, but standards are maintained in branded products. The GST cut will make branded items cheaper, due to which people will be more attracted to them. It is also good from the health point of view, as dairy products are a big source of protein and nutrients.
Overall impact on the dairy industry
This decision will give new energy to the dairy sector. India is already the world's largest milk producer, but the GST cut will make it stronger in the global market. Companies can now increase investments, such as setting up new factories or upgrading technology. Companies like Heritage Foods are already considering capacity expansion.
There are challenges, though. The GST system will take some time to update, and the supply chain will have to adjust. But industry leaders believe it will be positive in the long run. Economists say it will help control inflation as food prices will come down.
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