GST Relief Sought for Dairy Products Amidst Rising Costs in India
As the Union Budget 2026–27 approaches in India, there is a growing call from small businesses and traders for relief from the Goods and Services Tax (GST) on essential commodities such as dairy products. Retailers across Hyderabad have noted that the persistent input cost pressures and declining consumer demand are eroding their already thin margins.
Reports from traders, including small dairy and grocery retailers, indicate that the indirect taxes on everyday items like milk and sugar are making it difficult to balance consumer affordability with business sustainability. Frequent price increases in these essential commodities have also reduced the ability of retailers to maintain adequate stock levels, affecting their daily turnover.
Specifically, within the dairy sector, while liquid milk remains a staple, there is a concern about the sensitivity of value-added segments like flavored milk, paneer, and packaged curd to price fluctuations. Retailers warn that higher tax incidence on these processed dairy items could suppress demand in categories that are key growth drivers for the sector.
Retailers and trade representatives have urged the government to reduce or waive GST on essential food and dairy products. They argue that such a move would not only support small traders but also help stabilize consumer demand at the grassroots level. Some business owners have also called for a broader rationalization of GST rates on essential household goods, noting that high tax slabs are dampening purchasing power.
From a dairy sector perspective, GST policy implications extend beyond retail pricing. A reduction in tax burdens on essential dairy products could support steady offtake in urban and semi-urban markets, improve cash flow for small retailers and distributors, encourage consumption of nutrient-rich dairy products, and stabilize demand for cooperatives and processors dependent on consistent volumes.
The Budget session of Parliament begins on January 28, with the Union Budget scheduled for presentation on February 1. As policymakers work to balance fiscal priorities with growth and inflation concerns, GST relief on essentials has emerged as a key expectation from small business communities. The outcome of these discussions could influence both short-term retail demand and the longer-term trajectory of value-added dairy consumption in India.
