The 56th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman, has delivered a much-anticipated tax reform that’s already energising the dairy, agriculture, and packaged food sectors. The Council has slashed GST rates across a wide range of value-added dairy products, fertilizers, and agri machinery, creating ripple effects across Indian stock markets and rural supply chains.
🔻 What Changed: Major GST Rate Revisions (Effective from September 22)
| Category | Old GST Rate | New GST Rate |
|---|---|---|
| UHT Milk, Paneer | 5% | 0% |
| Ghee, Butter, Cheese, Condensed Milk | 12% | 5% |
| Plant-Based & Soya Milk Drinks | 12% | 5% |
| Fertiliser Inputs (e.g., Ammonia, Sulphuric Acid) | 18% | 5% |
| Farm Machinery & Tractor Components | 12–18% | 5% |
| Biopesticides (Neem, Trichoderma, etc.) | 12% | 5% |
📈 Stock Market Reaction: Dairy Stocks Surge
Following the announcement on Thursday:
- Parag Milk Foods jumped 7.4% to ₹263.50
- Dodla Dairy surged 4.5% to ₹1,498.85
- Nestlé India rose 3.02% to ₹1,230.90
- Kaveri Seeds also gained 2.9%
Market experts attributed this rally to improved consumer affordability, expected volume growth, and margin expansion across FMCG and dairy firms.
🗣️ Industry Reactions: Cheaper Dairy, Stronger Demand
✅ Mother Dairy
“We commend the Union Government’s decision to reduce GST rates on a wider range of dairy products… This will significantly boost affordability and accessibility for consumers.”
— Manish Bandlish, MD, Mother Dairy
Mother Dairy confirmed it will pass on the full GST reduction benefit to consumers, particularly in value-added segments like butter, paneer, cheese, and UHT milk—categories where affordability drives adoption.
✅ Heritage Foods
“This shift strengthens formal supply chains, builds consumer trust, and supports more nutritious diets… We are passing on the benefits to consumers and preparing to scale up for expected demand.”
— Mrs. Bhuvaneswari Nara, VC & MD, Heritage Foods
Heritage Foods emphasised that these reforms will help branded, high-quality dairy products better compete with unorganised players, creating stronger opportunities for formal market expansion.
✅ Broader FMCG Outlook
“With reduced rates on toothpaste, toothbrushes, shampoos, and household essentials, the GST overhaul supports broad-based household consumption—benefiting rural and urban FMCG.”
— Market Analysts, HDFC SKY
The simplified two-slab GST structure (5% and 18%) replaces the earlier four-slab system (0%, 5%, 12%, 18%, 28%)—a move that will reduce compliance burden, improve pricing transparency, and stimulate demand.
🌾 Implications for Agriculture & Dairy Value Chain
“This GST realignment is not just a tax change—it’s a signal for formalization. Lowering barriers for value-added dairy means safer products, better traceability, and more confidence for both consumers and farmers. It’s a huge opportunity for digital-first dairy solutions to scale in India.” -Prashant Tripathi, Director Jordbrukare India.
- For Consumers: Lower GST = Lower prices, especially on staples like ghee, paneer, butter, and cheese
- For Farmers: Cheaper fertilizers and agri-equipment improve input affordability
- For Processors & Retailers: Boosted demand for packaged goods, streamlined logistics, and expansion in Tier II–III markets
- For India’s Formal Dairy Sector: Better price parity with informal/unregulated players
