How Will GST Reforms Enhance the Cooperative Sector and Benefit 10 Crore Dairy Farmers?

New Delhi, Sep 6 (NationPress) The transformative Goods and Services Tax (GST) reforms are set to empower the cooperative sector, enhance the competitiveness of their products, and increase the demand for these goods while boosting the income of cooperatives, as stated by the government on Saturday.

The central government has unveiled significant GST reductions across crucial sectors that directly affect cooperatives, farmers, and rural businesses, impacting over 10 crore dairy farmers in India.

These reforms aim to foster rural entrepreneurship, support cooperatives in the food processing industry, and ensure that millions of households have affordable access to essential goods.

The Ministry of Cooperation indicates that the reductions in GST rates will be advantageous for cooperatives involved in agriculture and animal husbandry, promote sustainable farming methods, and provide benefits to small farmers and Farmer Producer Organizations (FPOs).

In the dairy segment, farmers and consumers will receive direct relief as both branded and unbranded milk and paneer are now exempt from GST. Additionally, the tax on butter, ghee, and similar products has been decreased from 12 percent to 5 percent, and the GST on milk cans made from iron, steel, or aluminum has also been lowered from 12 percent to 5 percent.

Such measures will enhance the competitiveness of dairy products, provide immediate relief to dairy farmers, and fortify women-led rural enterprises, especially self-help groups involved in milk processing.

In the realm of food processing and household goods, significant relief has been granted as GST on cheese, namkeens, butter, and pasta has been reduced from 12 percent or 18 percent to 5 percent. Furthermore, jams, jellies, yeasts, bhujia, and fruit pulp or juice-based drinks will now be taxed at 5 percent.

Products like chocolates, corn flakes, ice creams, pastries, cakes, biscuits, and coffee have also benefited from a reduction from 18 percent to 5 percent.

Lower GST rates will lessen household expenditures on food items, stimulate demand in semi-urban and rural locales, and encourage growth in the food processing and dairy cooperative sectors. This will further elevate food processing, milk processing cooperatives, and private dairies, subsequently raising farmers' incomes.

Moreover, the GST on packing materials, such as paper, cases, and crates, has been cut to 5 percent, alleviating logistics and packaging expenses for cooperatives and food producers.

The GST for tractors below 1,800 cc has been reduced to 5 percent, making them more affordable and benefiting both crop farmers and those involved in animal husbandry and mixed farming. These tractors can be utilized for fodder production, transporting feed, and efficiently managing farm outputs. Additionally, tractor components like tyres, hydraulic pumps, and various other parts have experienced a reduction from 18 percent to 5 percent, further decreasing costs and directly benefitting numerous cooperatives in agriculture.

The GST on essential fertilizer inputs like ammonia, sulphuric acid, and nitric acid has been lowered from 18 percent to 5 percent, correcting the inverted duty structure, reducing input costs for fertilizer manufacturers, preventing price hikes for farmers, and ensuring timely access to affordable fertilizers during planting seasons, which will directly assist many cooperatives in the agricultural sector.

Likewise, the GST on 12 bio-pesticides and several micronutrients has been reduced from 12 percent to 5 percent, promoting eco-friendly and sustainable farming practices by making bio-based inputs more accessible, thus encouraging farmers to transition from chemical to bio-pesticides for improved soil health and crop quality, offering direct benefits to small organic farmers and FPOs in line with the Government's Natural Farming Mission.

This adjustment will again favor numerous cooperatives in the farming sector.

The GST on commercial vehicles, including trucks and delivery vans, has been slashed from 28 percent to 18 percent. This reduction will lower the initial capital cost of trucks, which are crucial to India’s supply chain, transporting nearly 65–70 percent of goods traffic. Consequently, this will decrease freight rates per tonne-km, creating a positive chain reaction that makes the movement of agricultural products more economical, lowers logistics costs, and improves export competitiveness.