The recent decision to reduce GST rates on a range of dairy products to 5 per cent is expected to have significant benefits for both consumers and farmers, according to K. Rathnam, CEO of Milky Mist Dairy Food Ltd. The Tamil Nadu-based dairy company executive said the move would make nutritious and value-added products such as cheese, butter, ghee, and paneer more affordable and accessible.

Rathnam added that the GST reduction comes at a crucial time for the dairy sector, as it would stimulate demand, encourage innovation, and strengthen the organised dairy ecosystem. “At Milky Mist, we see this as more than a tax reform; it is a catalyst for inclusive growth,” he said in a statement on Friday.

He noted that the lower GST would help expand the market for high-quality, packaged dairy products, encouraging consumers to shift from unregulated supply chains to safe, standardised offerings. This shift, he said, would benefit public health and create stronger, more stable demand for millions of dairy farmers who form the backbone of India’s dairy industry.

Rathnam also highlighted that the GST cut aligns with India’s nutritional vision by making protein- and calcium-rich foods more affordable, particularly in rural and semi-urban areas. He emphasised the industry’s responsibility to reinvest the benefits into farmer training, sustainable sourcing, cold chain infrastructure, and product innovation to meet evolving consumer needs.

Under the revised GST structure announced on September 3, ultra-high temperature (UHT) milk will now attract a 0 per cent GST, down from 5 per cent. Pre-packaged and labelled paneer/chhena will also be taxed at 0 per cent. Other products, including butter, ghee, dairy spreads, cheese, condensed milk, and milk-based beverages, will attract a 5 per cent GST, effective from 22 September 2025, compared to the earlier rate of 12 per cent.