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As an increasing number of people seek to adopt healthier lifestyles, essential ingredients such as ghee are once again becoming staples of many diets. A recent report by market intelligence firm iMARC Group suggests that India’s per capita ghee consumption is expected to increase to 4.07 kg by 2034, up from 3.27 kg in 2024 and 2.68 kg in 2014. This growth can be attributed to the rising demand driven by cultural significance and an increasing awareness of its health benefits. India’s ghee market is projected to reach Rs 6.93 lakh crore by 2032, from Rs 3.2 lakh crore in 2023.
India needs to recognise a simple yet crucial truth about its diets, asserts Dr Sachin Shah, Director of Neonatal and Paediatric Intensive Care Services at Surya Hospitals in Pune. “Ghee is a healthier staple compared to refined oils and butter. According to research published in the Journal of Food Science and Technology— the official publication of the Association of Food Scientists and Technologists of India—it improves nutrient absorption, strengthens the immune system, and contains essential vitamins A, D, E, and K. It helps with energy production, digestion, and brain development in kids. Ghee, when used moderately, can be an ally in the fight against lifestyle diseases by providing protection,” Shah says. He adds that traditional Indian diets recognised this wisdom centuries ago, but in the rush toward so-called ‘modern’ cooking oils, we lost touch with the benefits of ghee.
“Unlike refined seed oils linked to inflammation and heart risks, ghee provides nutrients the body can absorb and use effectively,” says Shahida Chaudhary, a former senior dietitian at Moolchand Hospital, echoing this view. “For the average household, a spoon of ghee can improve satiety, boost immunity—and even aid heart health when taken in moderation.”
It is this very nutritional value of ghee, experts argue, that makes its affordability a matter of public health concern. In recent times, ghee prices have gone up due to an increase in milk prices and growing demand, apart from the high GST. Experts contend that if healthier fats like ghee are kept out of reach because of high taxes, people will continue to fall back on cheaper, less safe oils.
Industry observers suggest that making ghee more affordable could involve reducing its GST burden, as consuming ghee is not a luxury but rather a matter of preventive health. “If millions of families are priced out of healthier options, they will turn to harmful substitutes,” says Chaudhary. “Lowering GST on ghee is a health investment for the country, not just a tax tweak.”
Prime Minister Narendra Modi on August 15, 2025, made a big announcement regarding the GST structure in the country, aimed at reducing taxes on daily-use items. “The government will bring Next Generation GST reforms, which will bring down the tax burden on the common man. It will be a Diwali gift for you,” he states.
With both health experts and industry voices aligned, along with PM Modi’s announcement, the call for lowering GST on essentials like ghee has intensified. This change would not only provide tangible relief to households but also support the industry. Citing both public health benefits and sound economic logic, dairy leaders, policy experts, and cooperatives are advocating a 5% GST on ghee—similar to the tax applied to curd, buttermilk, and edible oils. An expert in the health sector and advisor at the National Health Systems Resource Centre, Dr K. Madan Gopal, calls a lower GST a “sound economic and public health move.”
Under the GST regime, ghee and butter are subject to 12% tax, whereas curd and buttermilk are taxed at a rate of 5%. “While historically consistent, today it contrasts sharply with nutritional and policy logic,” says Pankaj Jain, Indirect Tax Partner at EY.
India’s dairy sector supports over 80 million smallholder households, and more affordable ghee would “directly improve nutrition, raise real incomes, and reduce informal trade,” Gopal observes. Currently, only about 15% of the ghee market is formal, leaving the rest vulnerable to adulteration and tax evasion, he informs. “A 5% GST is not just a tax adjustment; it is a timely correction that benefits farmers, consumers, and public health alike,” he argues.
Notably, supporters of this idea contend that a 5% GST would boost affordability, reduce counterfeits, encourage innovation, and increase rural incomes—without denting revenue, as higher formal consumption could expand the tax base. Ravin Saluja, Director of Sterling Agro Industries, the parent company of Nova Dairy, believes that the GST cut could lift sales by 20-25% and raise farmer incomes by Rs 2-2.5 per litre. Similarly, Sandeep Aggarwal, Director of SMC Foods, projects a revenue increase of at least 25% along with better plant utilisation.
Additionally, R.S. Sodhi, Chairman of the India Dairy Association, cautions about the increasing issue of adulteration. He says that aligning ghee and butter with lower-taxed essentials will improve compliance, curb unsafe substitutes, and unlock growth in a sector vital to both farmer prosperity and national nutritional security.
Following PM Modi’s announcement, the GST Council is set to meet on September 3 and 4 to decide on reducing tax levies on various goods and services. Sources indicate that the 5% slab is being considered for all food and textile products. See details.
Source: Online/GFMM
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