Will GST Reforms Transform India's Dairy Sector and Aid 8 Crore Rural Farmers?
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Synopsis
The recent GST reforms are poised to revolutionize India's dairy industry, enhancing productivity and supporting over 8 crore rural farmer families. This bold initiative promises to uplift livelihoods and foster sustainable growth in one of the country's most vital sectors.
Key Takeaways
- Over 8 crore rural farmer families will directly benefit from the reforms.
- The Indian dairy sector contributes 5.5 percent to the national economy.
- Most dairy products are now subject to a 5 percent GST rate.
- The sector's market size is projected at Rs 18.98 lakh crores by 2024.
- The reforms aim to enhance competitiveness and sustainability in dairy farming.
New Delhi, Sep 5 (NationPress) The latest GST reforms are set to significantly enhance productivity and competitiveness within the dairy sector, positively impacting over 8 crore rural farmer families, as reported by government sources. This transformative initiative, endorsed by the 56th GST Council, introduces critical tax adjustments on milk and dairy products.
As the leading global producer of milk, India generated an impressive 239 million tonnes of milk in 2023–24, constituting approximately 24 percent of worldwide milk production.
Dairy stands as the most significant agricultural product, contributing 5.5 percent to the national economy. The market value of milk production reached Rs 12.21 lakh crore at current prices for 2023–24.
The overall market size of the Indian dairy sector is projected to reach Rs 18.98 lakh crores by 2024.
This reform represents one of the most extensive adjustments in GST rates within the sector, with most dairy items now either exempt from tax or subject to a mere 5 percent rate.
Previously, all dairy milk, excluding Ultra High Temperature (UHT) milk, was exempt from GST. Now, UHT milk has also been exempted to ensure similar tax treatment amongst comparable products. Additionally, plant-based milk alternatives, aside from soya milk, faced an 18 percent GST rate, while soya milk was taxed at 12 percent. The new GST rate for both plant-based and soya milk drinks has been reduced to 5 percent.
Before the tax adjustments, paneer sold in non-packaged forms was already exempt. The amendments now apply specifically to paneer that is pre-packaged and labeled, aimed at promoting Indian cottage cheese.
This vital tax reform is anticipated to invigorate the dairy industry, providing advantages to both farmers and consumers and contributing to the nation’s overall socio-economic progress.
“This reform is projected to directly benefit over 8 crore rural farmer families, especially smallholders and landless laborers involved in dairy farming for their livelihood, while also aiding a significant consumer base. Reduced taxation will lower operational costs, prevent adulteration, and improve the competitive edge of Indian dairy products in domestic and international markets,” stated government officials.
Point of View
I believe the recent GST reforms herald a significant turning point for India's dairy sector. This initiative not only fosters economic growth but also uplifts the livelihoods of millions of rural families. With a focus on sustainable practices and reduced operational costs, these changes align perfectly with our nation’s development goals.
NationPress
05/09/2025
Frequently Asked Questions
What are the recent GST reforms in the dairy sector?
The recent GST reforms involve tax rationalizations on milk and dairy products, with most now either exempt from tax or liable for a 5 percent rate.
How will these reforms benefit rural farmers?
These reforms are expected to benefit over 8 crore rural farmer families by reducing operational costs and enhancing competitiveness in both domestic and export markets.
What is India's position in global milk production?
India is the largest milk producer globally, accounting for about 24 percent of the world's milk with an output of 239 million tonnes in 2023–24.
What is the estimated market size of the Indian dairy sector?
The Indian dairy sector's market size is projected to reach Rs 18.98 lakh crores in 2024.
What changes were made to the GST rates on dairy products?
Most dairy products are now either exempt from tax or attract a 5 percent rate, providing significant tax relief in the sector.
