New Delhi: In a landmark move, the Central Government has announced sweeping reductions in Goods and Services Tax (GST) across key sectors, offering direct relief to over 10 crore dairy farmers, cooperatives, and rural enterprises. The reforms, hailed as part of the #NextGenGST agenda under the leadership of Prime Minister Narendra Modi, are expected to cut costs, stimulate demand, and strengthen rural entrepreneurship while making essential goods more affordable for households.
Dairy Sector Gets Big Relief
Milk and paneer, branded or unbranded, have been exempted from GST, while butter, ghee and related products now attract only 5% tax, down from 12%. GST on milk cans made of iron, steel or aluminium has also been cut from 12% to 5%. These measures will not only enhance nutrition security and reduce household expenditure but also improve the competitiveness of dairy cooperatives and women-led rural enterprises such as self-help groups engaged in milk processing.
Food Processing Becomes Cheaper
The food processing sector has seen significant relief, with GST on cheese, namkeens, butter, pasta, jams, jellies, yeasts, bhujia and fruit pulp or juice-based drinks reduced to 5%. Household favourites including chocolates, cornflakes, ice creams, pastries, cakes, biscuits and coffee have also come down from 18% to 5%. This move will ease family budgets, stimulate demand in semi-urban and rural areas, and boost cooperatives and private players engaged in food and milk processing.
Support for Farmers and Cooperatives
Tractors below 1800 cc will now attract only 5% GST, making them more affordable for crop and livestock farmers alike. Tractor components such as tyres, hydraulic pumps and tubes have also seen a reduction from 18% to 5%. On the fertiliser front, GST on critical inputs like ammonia, sulphuric acid and nitric acid has been cut from 18% to 5%, lowering input costs for manufacturers, preventing fertiliser price hikes and ensuring timely availability for farmers.
In addition, GST on twelve bio-pesticides and several micronutrients has been reduced from 12% to 5%, promoting eco-friendly, sustainable and organic farming practices. This will encourage small farmers and Farmer Producer Organisations (FPOs) to adopt bio-based solutions, supporting the Government’s Natural Farming Mission.
Logistics and Packaging Relief
The GST on packing paper, cases, and crates has been reduced to 5%, directly lowering packaging and logistics costs for cooperatives and food producers. Further, GST on commercial trucks and delivery vans has been reduced from 28% to 18%, cutting upfront capital costs for transporters and lowering freight rates per tonne-km. This will reduce agricultural logistics costs, make exports more competitive, and ease supply chain pressures. Complementing this, GST on third-party insurance of goods carriage has been cut from 12% to 5% with Input Tax Credit (ITC) benefits.
Transforming Rural India
By lowering costs across food, farming, logistics and inputs, these GST reforms are designed to strengthen cooperatives, increase farmer incomes, and expand opportunities for rural entrepreneurs. The dairy cooperative sector, including major brands like Amul, has already welcomed the decision, calling it a “game-changer” for rural India.
With affordable fertilisers, reduced machinery costs, cheaper transport, and accessible food products, the reforms are set to boost rural demand, empower women-led enterprises, and promote sustainable agriculture—delivering widespread economic and social benefits across India’s villages.