The GST on ghee and butter is hurting the dairy industry and farmers alike and they want the rates to be reduced. The GST on butter and ghee is at 12%.
Dairy industry representatives have drew the government’s attention to this issue wanting an immediate reduction as it could break the back of the industry.
NCP leader Sharad Pawar told the industry representatives that reduction of GST was doable. He urged the dairy industry to talk to the Maharashtra state government to take up this matter with the GST Council to bring down GST to the 4-5% level.
There is 1 lakh tonne of butter worth Rs 30,000 crore lying in the cold storage of dairies in Maharashtra, Gujarat and Karnataka. Dashrat Mane, CMD, Sonai Group and Indapur Dairy and Milk Products, said.
The sale of ghee has fallen significantly in the domestic market as the impact of 12% GST works to around Rs 25 per kilo on an average, Mane said. Two years ago the demand was high and they were importing ghee and now sales are falling, he said. There is also no set off for ghee as milk is not taxed.
The dairy industry representatives were at the Loksatta Milk Conclave to discuss the agenda for the dairy industry beyond the while revolution in Pune on Friday. Rajiv Mitra, MD, Govind Milk and Milk Products, said the ghee consumption had reduced and consumers were going in for alternative edible oil products and promoting unhealthy eating habits. The GST on imported edible oil is 5% while home made ghee attracted 12% GST.
Devendra Shah of Parag Milk said customers can absorb the higher GST but it will end up hurting the dairy farmers the most.