Government looks to improve dairy sector through incentives on dairy exports

INDIA – The government of India is considering incentives on milk product exports, add milk to mid-day meal rations, reduce GST (Goods and Services Tax) and increase import duty on some products as a way to ensure dairy farmers get value for their efforts.

Highlighting challenges facing the milk production sector, government officials have decided to offer a 10% incentive on exports of milk and milk products with possibilities of expanding the options.

According to sources not identified by ET Retail, there’s a consideration for cutting GST on ghee and butter to 5% from 12% and increasing import duty on lactose to 60% from 40%.

The officials said dairy cooperatives had more than 150,000 tonnes of skimmed milk powder and they could easily export 50,000 tonnes if an export subsidy was given, helping firming domestic prices.

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Transport minister Nitin Gadkari who led the discussions said they were also looking at providing milk products as a part of midday meals at schools.
“States would soon be asked to come on board, also there are a lot of countries that receive grants from India. Some of these have shortage of milk.

We could offer them milk powder as a part of grant, we are finding out ways to push the retail demand of milk.

I urge people to replace cold drinks with milk,” he said.

Earlier this month, farmer’s group, Swabhimani Shetkari Sanghatana (SSS) threatened to stop milk supply to Mumbai from July 16 alleging the state government had failed to provide US$0.072 per litre subsidy.

Speaking on the government initiative, SSS spokesperson Yogesh Pande said, “The government has announced a subsidy of US$0.72 a litre for export of milk powder. It translates to US$0.072 a litre.

Along with the earlier subsidy of US$0.043 a litre being given for milk powder export, the powder manufacturing dairies are getting subsidy of US$0.12 a litre and paying farmers only US$0.23 a litre.”

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