GST Reset: A Defining Moment for India’s Dairy Sector

On 22 September 2025, India's GST Council set forth substantial changes to the dairy sector's tax regime, reframing existing structures into a simplified two-slab system. This significant shift includes exemptions for paneer and UHT milk, while ghee, butter, and cheese now see reduced taxes fr om 12% to 5%.

These reforms aim to enhance the affordability and competitiveness of branded dairy products, particularly benefiting rural areas wh ere dairy is essential but price-sensitive. The initiatives are not just price adjustments but also a means to bridge India's protein and nutrition gap, making quality dairy products more accessible.

Industry leaders, including Mrs. Bhuvaneswari Nara of Heritage Foods and Devendra Shah of Parag Milk Foods, have emphasized the transformative impacts on consumer affordability and farming stability, foreseeing an uplift in rural income and enhanced farmer productivity.

The reforms also encourage a shift towards more formal and safer supply chains, reducing the gap between unregulated markets and branded companies. Stakeholders like Deepak Jolly and Ravin Saluja view this as a pivotal step towards enhancing compliance and fostering innovation.

Strategically, the reform is seen as a catalyst to reinvest in operational capacities and expand distribution networks, setting the stage for significant growth ahead of the festive season. The broader implications foresee increased nutritional access, empowerment of farmers, and a focus on formalizing the sector, contributing to India's evolving dairy ascendancy.