Mother Dairy GST Cuts Left Daily Pouch Milk Untouched

Mother Dairy cut 1 litre tetra milk from ₹77 to ₹75 from September 22, 2025, after GST on UHT milk fell to nil. The 200 g paneer pack went from ₹95 to ₹92. Fresh pouch milk did not move.

The NDDB subsidiary passed the full tax cut on long-life milk, paneer, ghee, butter, cheese, shakes and ice cream. A year later those packs are the lines that grew, while booth milk rose again with feed and fuel costs.

Pouch Milk Was Already Untaxed

Households that buy a poly pack every morning were told dairy had become cheaper. The pack in their fridge was never in the taxed slab. Fresh pouch milk, including full cream, toned and cow milk, has sat at 0% GST since the levy began, so there was no rate left to hand back.

Jayen Mehta, managing director of Gujarat Co-operative Milk Marketing Federation, which markets Amul, shut down reports of a ₹3 to ₹4 pouch cut before the new rates even went live.

There is no change proposed in prices of fresh pouch milk as there is no reduction in GST. It has always been zero percent GST on pouch milk.

Jayen Mehta, Managing Director, Gujarat Co-operative Milk Marketing Federation

Mother Dairy said the same for its everyday pouches. The company’s own announcement on September 22, 2025 still pulled questions about the booth price, including why a litre of full cow milk had not fallen. That mix-up was built into the reform: the tax cut sat on tetra packs and labelled paneer, not on the pouch the booth sells before breakfast.

We welcome the recent GST reforms announced by the Government of India, aimed at making everyday essentials more affordable and accessible.

At Mother Dairy, we are delighted to pass on the full benefit of this reform to our consumers. With our entire range now under the… pic.twitter.com/GZmntgvYp2

— Mother Dairy (@MotherDairyMilk) September 22, 2025

Mother Dairy Cut the Packs That Carried GST

Mother Dairy, a wholly owned arm of the National Dairy Development Board, posted a new MRP list on September 16, 2025, for sale from September 22. Then managing director Manish Bandlish said the firm would pass on 100% of the tax benefit, and that its full range would sit at nil or 5%. The company had a turnover of ₹17,500 crore in the fiscal year before the cut.

The recent GST reduction across a wide range of dairy and processed food products represents a progressive step that will significantly boost consumption and accelerate the adoption of safe, high-quality packaged offerings. As a consumer-centric organisation, we are passing on 100 per cent of the tax benefit to our patrons, effective September 22, 2025, keeping up with the spirit of this reform.

Manish Bandlish, Managing Director, Mother Dairy, company statement

The rupee cuts were small on milk and larger on fat. A litre of toned UHT fell by ₹2. A litre carton of ghee fell by ₹30. Butter in the 100 g pack fell by ₹4, and the 500 g pack fell by ₹20. Safal horticulture lines such as jam, pickles, tomato puree and frozen fries moved with the 12% to 5% slab; mixed fruit jam in the 500 g jar went from ₹180 to ₹165. Ice cream had the steepest tax drop, and a 100 ml Choco Vanilla cone went from ₹30 to ₹25.

MOTHER DAIRY MRPS FROM SEPTEMBER 22, 2025

Bandlish said farmers would gain if demand for packed food rose, and that GST cuts on farm equipment would help the same chain. The ministry used the same frame: cheaper packaged dairy, less adulteration, more formal milk.

The 56th GST Council’s Dairy Rate Card

The 56th GST Council, chaired by Union Finance Minister Nirmala Sitharaman in New Delhi on September 3, 2025, moved UHT milk and packaged paneer to nil GST and cut butter, ghee, cheese, condensed milk and milk drinks from 12% to 5%. Ice cream fell from 18% to 5%. Milk cans used by dairies fell from 12% to 5%. The Ministry of Fisheries, Animal Husbandry and Dairying said the new rates would apply from September 22, 2025, and would help more than 8 crore rural farmer families.

India produced 239 million tonnes of milk in 2023-24, about 24% of world output. Dairy is 5.5% of the national economy. Milk output was valued at ₹12.21 lakh crore that year, and the ministry put the sector at ₹18.98 lakh crore in 2024. The Council also collapsed the old four-slab map into a simple tax of 5% and 18%, with a 40% de-merit rate for a short list of goods.

DAIRY GST RATES FROM SEPTEMBER 22, 2025

CBIC issued Notification No. 9/2025-Central Tax (Rate) and Notification No. 10/2025-Central Tax (Rate) on September 17, 2025, to put those goods rates into the tariff from September 22. Loose, unlabelled paneer was never in the 5% pack in the first place, so the nil rate is a packaged-goods rule.

Packaged Dairy Pays Better Than Liquid Milk

Liquid milk is still the bulk of what India drinks, but it is a thin-margin, high-volume line that moves with procurement and fodder. Paneer, cheese, ghee, shakes and ice cream are the packs brands can tax-cut, advertise, and ship through modern retail and quick commerce. IMARC Group put the UHT milk market at 1,468 million litres in 2025 and forecast 4,148 million litres by 2034, a CAGR of 11.87% from 2026 to 2034. Karnataka holds the largest state share, pulled by Bengaluru’s nuclear households and long-life demand.

INDIA DAIRY AFTER THE TAX CUT

• UHT volume: 1,468 million litres in 2025, with IMARC projecting 4,148 million litres by 2034.
• Market value: Persistence Market Research puts the India dairy market at $158.1 billion in 2026, heading for $304.2 billion by 2033 at a 9.8% CAGR.
• Liquid share: Drinking milk still holds about 48% of that market in 2026.
• Organised reach: NDDB chairman Meenesh Shah said organised players handle about 35% to 40% of surplus milk, leaving 60% to 65% with the unorganised trade.

Shah said White Revolution II aims to put dairy societies in 75,000 more villages and lift cooperative procurement toward 1,007 lakh kg a day by 2028-29. Union Cooperation Minister Amit Shah told the Lok Sabha that the farmer’s share of the consumer rupee, about 80%, is expected to move toward 85% as cooperatives sell more packed goods. That is a target, not a measured 2026 result.

Branded Paneer Demand Jumped After the Cut

Nil GST on labelled paneer arrived as states and the food regulator squeezed analogue blocks made with vegetable fat. Jayatheertha Chary, Mother Dairy’s managing director, said demand for the company’s packed paneer is running far ahead of last year, and that the firm has already doubled paneer capacity over two years. Curd, paneer, dairy drinks, cheese and ice cream recorded more than 30% volume growth in April-June 2026 against the same quarter a year earlier, he said, with modern retail, quick commerce and bulk kitchens in the mix.

At Mother Dairy, we are witnessing a 60-70 per cent year-on-year growth in demand for our packaged paneer during the current quarter, with the growth rate nearly doubling from the previous quarter.

Jayatheertha Chary, Managing Director, Mother Dairy

Mehta said Amul holds about 30% to 35% of branded paneer and makes it in 35 plants. Dairy veteran R.S. Sodhi put packed paneer at about ₹12,000 crore, or 3 lakh tonnes, and unpacked trade at about ₹30,000 crore, or 12 lakh tonnes. K. Rathnam, chief executive of Milky Mist Dairy Food, put the whole paneer market near ₹1 lakh crore and growing 15% to 18%, a separate industry estimate that is larger than packed plus unpacked dairy-fat paneer alone. Parag Milk Foods said it will spend about ₹100 crore to take paneer capacity from 20 metric tonnes a day to 80 metric tonnes a day by June 2027, after about 28% annual growth for two years.

The tax cut is one lever. The analogue crackdown is another. Together they pull loose, unlabelled cubes toward printed packs that can carry a nil rate. The 200 g Mother Dairy pack that went to ₹92 in September 2025 did not stay at that sticker on every shelf; some tickets drifted back toward ₹95 within months even though the GST rate on the labelled pack remained nil.

Daily Milk Prices Rose Again in 2026

The pouch never got a GST windfall, and procurement did not freeze. Persistence Market Research records that on May 14, 2026, Amul raised milk by ₹2 a litre across the country and Mother Dairy followed the same day, after procurement paid to farmers had risen by about 3.7% to 6% over the prior year, with dearer cattle feed and fuel. On August 11, 2026, cow and buffalo milk in Maharashtra rose by another ₹2 a litre after processors cited diesel and a nearly 30% jump in packing costs. Feed is about 70% of the cost of producing milk, so fodder moves the booth price faster than a tetra-pack tax cut.

On June 5, 2026, Mother Dairy began a naturally degradable milk pouch in Delhi-NCR, a packaging change on the same daily line that GST did not touch. From October 4, 2026, the Odisha State Cooperative Milk Producers’ Federation will raise toned milk from ₹54 to ₹58 a litre and premium milk from ₹58 to ₹60, after a ₹2 procurement increase from September 11, 2026. Gold will list at ₹62 a litre and Gold Plus at ₹66.

FROM THE GST VOTE TO THE NEXT HIKE

1. September 3, 2025: The 56th GST Council cuts UHT milk and packed paneer to nil and lowers ghee, butter, cheese and ice cream.
2. September 16, 2025: Mother Dairy issues new MRPs for tetra milk, paneer, ghee, butter, cheese and Safal foods.
3. September 22, 2025: The new goods rates go live. Pouch milk stays at 0% GST.
4. May 14, 2026: Amul and Mother Dairy raise pouch milk by ₹2 a litre on higher procurement and feed costs.
5. August 11, 2026: Maharashtra cow and buffalo milk rises by another ₹2 a litre.
6. September 22, 2026: GST 2.0 completes one year with UHT milk and packed paneer still at nil.
7. October 4, 2026: OMFED raises toned milk from ₹54 to ₹58 a litre in Odisha.

The nil rate on tetra milk and labelled paneer is still in the tariff. The pouch at the booth is still a procurement story, and in Odisha it gets more expensive from October 4, 2026.

Frequently Asked Questions

Why Did Pouch Milk Prices Not Fall After the GST Cut?

Fresh pasteurised milk in poly pouches has been at 0% GST since the tax launched in July 2017, so the 2025 rewrite could not lower a rate that was already nil. Full cream, toned and cow milk in everyday pouches sit in that exempt bucket. Only the UHT line under tariff heading 0401 moved to nil, which is why Amul and Mother Dairy both said booth pouches would not get a GST-linked cut.

Which Dairy Items Went to Nil GST in September 2025?

UHT milk and pre-packaged, labelled chhena or paneer went from 5% to nil. The same Council meeting also set Indian breads to nil, including chapati, roti, paratha and parotta. Milk cans used on farms and in dairies did not go to nil; they fell from 12% to 5%.

What Is UHT Milk and How Does It Differ From Pouch Milk?

UHT milk is heated to at least 135°C for a few seconds, which lets it sit unrefrigerated until the pack is opened. Mother Dairy’s 1 litre toned tetra pack carries a 180-day shelf life if stored cool and dry; once opened it must be refrigerated and used within two days. Fresh pouch milk is pasteurised, needs a cold chain from the plant to the booth, and is usually sold for use within a day or two.

When Did the GST 2.0 Dairy Rate Cuts Take Effect?

The GST Council voted on September 3, 2025, and CBIC issued Notification No. 9/2025-Central Tax (Rate) and Notification No. 10/2025-Central Tax (Rate) on September 17, 2025. New goods rates, other than specified tobacco items held back for compensation-cess loans, applied from September 22, 2025, under the 5% merit rate, the 18% standard rate, and a 40% de-merit rate for a short list of goods.

The nil GST line on tetra milk and labelled paneer is still the law. The pouch at the booth still tracks fodder, diesel and what dairies pay farmers, which is why Odisha’s toned milk rises to ₹58 a litre from October 4, 2026.