At the very outset, on behalf of the entire Indian dairy industry, I wish to extend our sincere gratitude to the Hon'ble Prime Minister, the Hon'ble Finance Minister, the GST Council, the Ministry of Agriculture & Farmers' Welfare, the Ministry of Fisheries, Animal Husbandry & Dairying, the Ministry of Food Processing Industries, and all concerned officials for the thoughtful and timely GST 2.0 reforms which came into effect on 22nd September 2025. These reforms reflect the Government's commitment to nutrition, rural livelihoods, and the formalisation of India's food value chains. The policy change will benefit producers, processors, and consumers alike, and we deeply appreciate the constructive engagement of the Government with stakeholders throughout this process.

The reset in GST is a landmark moment for our sector and has both immediate and medium-term implications. By rationalising rates-placing some categories of milk and paneer at zero tax and moving several value-added products such as ghee, butter, cheese, and condensed milk into lower slabs-the reforms have reduced the gap between the organised and unorganised sectors. This makes dairy products more affordable for consumers while incentivising a shift towards packaged, branded, and safer options. Industry estimates suggest significant benefits, with retail prices already moderating in several categories. This will encourage formalisation, reduce incentives for adulteration, strengthen consumer trust, and improve farmer incomes through higher organised demand.

It is also heartening to note that the industry has moved swiftly to align with these reforms. Several processors and cooperatives have already begun passing on the benefits to consumers by lowering the prices of milk, butter, ghee, paneer, and other products. Such responsible action demonstrates the industry's commitment to consumers and ensures that the benefits of tax rationalisation reach households, especially during the festive season when demand is high.

As we move into the festive season, demand for dairy products is expected to rise significantly, a trend that will be further accelerated by the positive consumer sentiment following the implementation of GST 2.0. However, the supply side continues to remain tight, with procurement pressures limiting availability. Over the last two years, prices of ghee and other fat-based dairy products have not increased much, further straining margins at a time of rising demand. This is likely to create a temporary demand-supply mismatch, particularly for fat-rich products. Nevertheless, with the advent of the flush season immediately after Diwali, this imbalance is expected to ease naturally, restoring stability to both supply and prices.

While these developments are encouraging, there remain several ground-level challenges that need urgent attention. The Indian Dairy Association (IDA) has highlighted these in its representation to the Department of Consumer Affairs (DOCA). In very small packs of Rs.5, or Rs.10, it is almost impossible to pass on fractional tax benefits without confusion. Reprinting or relabelling millions of small packs already in circulation is prohibitively expensive, and rounding off often negates the benefit. There are also issues of reconciling stock across retail networks and cases of Input Tax Credit (ITC) blockage when inputs are taxed but outputs fall into nil or exempt categories.

If not addressed, these issues could dilute the intended benefits of GST 2.0. We have therefore urged the Government to allow stickering on existing stock, introduce tolerance norms for very small packs, and issue clear guidance for retailers and distributors. Such measures would ease compliance, reduce costs, and protect both consumers and small processors.

Alongside these immediate issues, there are systemic concerns that require attention. Rising input costs-especially for feed, fodder, veterinary care, and breeding-continue to pressure farmers. Inverted duty structures create ITC accumulation and liquidity stress, underscoring the need for timely refunds. Clear classification and HSN descriptions are also critical to avoid disputes, while transparent monitoring of retail prices will help ensure benefits reach consumers. IDA stands ready to cooperate fully with authorities on such frameworks.

Another major concern for members is the tax treatment of dahi, lassi, and buttermilk. These are everyday staples and vital for affordable nutrition. We strongly believe they deserve to be treated as essential and considered for nil GST. Small-grammage packs also require a supportive transition, since the cost of compliance often exceeds the benefit. At the same time, safeguards are needed to prevent sudden influxes of cheap imports that could destabilise domestic markets and harm smallholder livelihoods, even as India expands its export footprint responsibly.

To translate GST 2.0 into long-term benefits for nutrition, farmer prosperity, and formalisation, IDA recommends the following steps:

• Issue clear guidelines on implementation.
• Establish tolerance mechanisms for small packs.
• Expedite ITC refunds.
• Review the tax treatment of essential products like dahi and lassi.
• Accelerate input-side support such as fodder and veterinary services.
• Strengthen testing and supply-chain traceability, and
• Create an export strategy that balances growth with farmer protection.

IDA and its members are fully committed to working with the Ministry of Finance, MoFAHD, MoFPI, MoA&FW, and CBIC to co-design these measures and pilot practical solutions across states.

Alongside GST, another critical policy dialogue is underway on Front-of-Pack Nutrition Labelling (FOPNL). On 29th August 2025, IDA organised a webinar on "Front-of-Pack Nutrition Labelling - Implications for Milk and Milk Products" to discuss how FSSAI's proposed Health Star Rating (HSR) and HFSS thresholds may impact dairy. While multiple formats are being explored, experts pointed out that current algorithms-which penalise natural saturated fats or sugars-risk unfairly categorising nutritious foods like milk, curd, paneer, and ghee at par with less healthy options. Concerns were raised that products like flavoured milk could be rated similarly to energy drinks, ignoring the holistic nutritional contribution of dairy.

The webinar, attended by over 500 participants from across the dairy fraternity, brought together eminent experts from both industry and academia. Discussions emphasised the need for labelling frameworks that recognise the unique food matrix of dairy and its critical role in balanced diets. The IDA remains committed to constructive dialogue with regulators to ensure that consumer information is strengthened without undermining the role of dairy in nutrition and health.

GST 2.0 is a landmark reform for Indian dairy. It signals the Government's resolve to nurture nutrition, strengthen rural livelihoods, and promote formalisation. At the same time, regulatory debates such as FOPNL remind us of the importance of ensuring that policies reflect India's dietary realities and do not unintentionally undermine foods central to our culture and health.

The industry welcomes the constructive spirit shown by policymakers, and the IDA will continue to provide ground-level feedback, advocate practical solutions, and work with all stakeholders to ensure that reforms and regulations translate into affordable nutrition for consumers, fair returns for farmers, and sustainable growth for the sector.

I call upon all our members-cooperatives, private processors, traders, and allied industries-to join hands in this journey. With unity, dialogue, and partnership with the Government, we can ensure that the full promise of these reforms and frameworks is realised, and that the dairy sector continues to nourish, empower, and uplift millions of Indian households.