The recent GST rationalisation announced by the Government of India has brought substantial benefits to cooperatives across dairy, food processing, agriculture, and rural enterprise sectors. These measures strengthen cooperative competitiveness, improve farmer incomes, and enhance accessibility of essential goods.
1. Dairy Sector
Revised GST Rates
- Milk & Paneer: GST reduced to 0% (Nil).
- Butter, Ghee, Cheese, Milk Cans, etc.: Reduced from 12% → 5%.
Likely Impact on Dairy Cooperatives
- Improved price competitiveness: Lower GST makes dairy products cheaper, encouraging greater consumer demand.
- Boost in cooperative revenue: Higher demand leads to increased sales volumes for cooperative brands.
- Direct benefit to dairy farmers: Cooperatives will pass on gains through higher procurement prices.
- Better farmer share of consumer price: Expected to rise from 80% → ~85%, strengthening farmer income stability.
2. Food Processing Sector
Revised GST Rates
GST on most processed foods reduced to 5%, such as:
- Jams, jellies, fruit pulp
- Fruit juice-based drinks
- Chocolates, corn flakes
- Ice creams, pastries, cakes, biscuits
Likely Impact
- Higher demand for processed foods due to lower retail prices.
- Increased revenue for cooperatives in food processing.
- Better margins enable investments in technology, packaging, and product innovation.
3. Agriculture & Rural Enterprise Sector
Revised GST Rates
- Fertilizer inputs (Ammonia, Sulphuric Acid, Nitric Acid): 18% → 5%
- Bio-pesticides & micronutrients: 12% → 5%
- Tractors (below 1800 cc): Reduced to 5%
- Tractor components (tyres, tubes, hydraulic pumps): 18% → 5%
Read More: Dairy Market Set to Reach USD 33.99 Billion by 2034, Driven by 5.51% CAGR
Likely Impact
- Lower fertilizer production costs → more affordable fertilizers for farmers.
- Timely availability of inputs enhances agricultural productivity.
- Encourages shift to bio-based inputs, improving soil health and crop quality.
- Direct benefit to small farmers and FPOs through reduced machinery and input costs.
- Supports sustainable and climate-resilient agriculture.
4. Overall Impact on Cooperative Ecosystem
Enhanced Competitiveness
- Cooperative brands become more attractive against unorganised and private-sector players.
Higher Sales & Surplus
- Increased market demand improves cooperative profitability.
- Surplus is redistributed to members, strengthening the cooperative model.
Women & SHG Empowerment
- Better price stability and assured markets encourage self-help groups (SHGs) and micro-entrepreneurs to link with cooperatives.
- Expands income-generation opportunities across States/UTs.
Food Safety & Consumer Trust
- Cooperatives can now scale more efficiently, promoting safer, standardised food products across rural and urban markets.
Source
The information was shared by Union Minister for Home and Cooperation, Shri Amit Shah, in a written reply in the Rajya Sabha.
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I do my best to share reliable and well-researched market insights but occasional errors or omissions may slip through. Please view all content as informational.
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