Indian Dairy Association (IDA) has written to Union Finance Minister Nirmala Sitharaman to withdraw the GST Council decision of levying 5% GST on prepacked and unbranded food items including fermented milks (buttermilk, lassi, curd) and paneer.
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Besides, Indian Dairy Association was unhappy over the hike in taxes on dairy machinery and milking machines from existing 12% to 18% and called the decision a ‘cause of stress’ – as reported on FnBNews.
“The decision of the GST Council will cause severe stress on the economic viability of dairy sector which is already strained due to increased input cost on the ingredients used in the manufacture of cattle feed and veterinary medicines, and exorbitant costs of raw milk, processing, packaging, energy, transport, labour and other items used in dairy operations. The Covid-19 had adversely affected the economy of the cooperative dairies and private sector due to many unresolved disruptions caused in the dairy value chain,” the letter read.
The meeting was attended by 114 stakeholders comprising of representatives of Cooperative Dairy Federations from GCMMF (Gujarat), KMF (Karnataka), MILMA (Kerala), Sudha (Bihar), OMFED (Orissa), Mother Dairy, IDMC and private sector such as Ananda Dairy Foods, Heritage Dairy, Dodla Dairy, Hatsun Agro, Creamy Foods, ITC, REIL, Goma Engineering, Creamline Dairy and representatives of Milk Producers Companies. Leading dairy consultants and some members of the Central Executive Committee of IDA also participated at this meeting.
According to IDA, in the past, it had sent representation to the GST Council a number of times to reduce the GST on butter and ghee for boosting the consumption of vitamin-rich products for ensuring nutritional security among vulnerable populations while maintaining that high GST rate on butter and ghee has put organised dairy industry in a very compromising situation with undue competition of Rs.60 to Rs.70 per kg of ghee in the marketplace.
Meanwhile, the imposition of higher rates of GST at 18% on dairy machinery and milking machines has brought great economic distress on the equipment fabricators and the milk producers, IDA said.
“Milking machines have been promoted essentially for production of hygienic raw milk by the farmers who have no provision for getting the GST credit. Small farmers will be discouraged to purchase expensive milking machines halting the process of modernisation in milk production. Hand milking will return to India to cause health risk to the consumers. Hand milking increases the microbial load in raw milk requiring high heat treatment and resulting in lower shelf-life of products. This will be a great historical mistake in the Government mission on “Make in India” and a loss of Indian heritage,” read the letter.