New Delhi, Sep 5 The recent GST reforms will give a major boost in further enhancing productivity and competitiveness of the dairy sector while ensuring sustainable livelihoods, directly benefitting over 8 crore rural farmer families, according to the government.
In a landmark move to strengthen India’s dairy sector, the 56th GST Council approved sweeping tax rationalisations on milk and milk products.
India is the world’s largest milk producer, with an output of 239 million tonnes in 2023–24, accounting for about 24 per cent of global milk production.
As the single largest agricultural commodity, dairy contributes 5.5 per cent to the national economy. Milk and milk products make up the largest share of value in the livestock sub-sector, with the value of milk output reaching Rs 12.21 lakh crore at current prices in 2023–24.
The overall market size of the Indian dairy sector is estimated at Rs 18.98 lakh crores in 2024.
The GST reforms mark one of the most comprehensive overhauls of GST rates in the sector, ensuring that most dairy products are now either exempt from tax or attract only a 5 per cent rate.
All dairy milk, other than Ultra High Temperature (UHT) milk, was already exempt from GST. Hence, UHT milk has been exempted to provide the same tax treatment to similar goods. Plant-based milk drinks, except soya milk drinks, attracted 18 per cent GST while soya milk drinks attracted 12 per cent GST. The GST rate on plant-based milk drinks and soya milk drinks has now been reduced to 5 per cent.
Prior to rate rationalisation, paneer sold in other than pre-packaged and labelled form already attracted a nil rate. Therefore, the changes have been made only in respect of paneer supplied in pre-packaged and labelled form. The measure is intended to promote Indian cottage cheese.
This significant tax rationalization is expected to boost the dairy sector and extend benefits to both farmers and consumers, contributing to the overall socio-economic development in the country.
“The reform will directly benefit over 8 crore rural farmer families, particularly small, marginal and landless labourers engaged in rearing milch animals for their livelihoods, while also supporting a large segment of consumers. Lower taxation will help reduce operational costs, curb adulteration, and enhance the competitiveness of the Indian dairy products in both domestic and export markets,” according to the government.
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