Reduced GST rates on dairy products and farm supplies to financially advantage over 100 million farmers
Published on September 6, 2025
The Indian government has announced significant GST cuts aimed at improving export competitiveness and reducing freight rates across the supply chain. The move is expected to have cascading benefits for rural entrepreneurship and food security.
The GST cuts are designed to stimulate demand in semi-urban and rural areas, with major dairy brands, including Amul, welcoming the news. The reduction in tractor and component prices will particularly benefit small farmers engaged in mixed farming and animal husbandry, as these tractors are commonly used for fodder cultivation and farm produce transportation.
The GST exemption on milk and paneer, along with reduced rates on processing equipment, is likely to improve margins for dairy farmers and dairy cooperatives. Moreover, the GST cuts on commercial vehicles are aligned with the government's natural farming mission, making bio-pesticides more affordable.
The GST restructuring is expected to prevent price rises for farmers and ensure timely availability of inputs during sowing seasons. It also aims to address the inverted duty structure in fertiliser manufacturing.
The Confederation of Indian Industry (CII) expressed positive views on the GST reductions on agricultural products and chemical fertilizers and additionally called for a change in the GST burden on seeds. The boost to the food processing sector is expected to reduce household expenditure on essential food items.
The GST rate cuts form part of one of the most comprehensive sectoral reforms targeting the agricultural and cooperative ecosystem. The cuts apply to dairy products, agricultural inputs, and food processing items, marking a significant step towards fostering a more competitive and sustainable agricultural sector in India.
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