India’s "Liquid Gold" Demands GST Cut

Indian dairy experts are calling for a reduction in the Goods and Services Tax (GST) on ghee from 12% to 5%. This move, they argue, would support farmers, increase safety by curbing adulteration, and enhance the formal market. Ghee, often referred to as "liquid gold," holds a significant place in Indian diets and the rural economy. Its current taxation at 12% undercuts this staple product, as other essential dairy items like curd and buttermilk are taxed at just 5%. R.S. Sodhi, President of the Indian Dairy Association, notes that the high tax hampers the organized sector, which constitutes only 15% of the ₹3.2 lakh crore ghee market. A tax reduction would encourage more market players to formalize, improving product quality and safety. Moreover, industry experts suggest that this tax cut could translate to a ₹2-2.5 increase per litre of milk, directly benefiting the earnings of millions of dairy farmers. While the GST Council has yet to act on these recommendations, stakeholders maintain that a lower GST could actually increase tax revenue by drawing more of the market into compliance, thus strengthening the entire dairy supply chain.