Empowering food processing and logistics through GST Reforms

The Government of India has announced landmark reforms through the 56th Meeting of the Goods and Services Tax (GST) Council held on 3 September 2025, ushering in a simplified and consumer-friendly tax regime for the food processing and logistics sectors. By rationalizing rates, the reforms aim to make essential food items more affordable, strengthen industry competitiveness, and improve supply chain efficiency.

Key Highlights of GST Reforms

• Exemption from GST for staples such as UHT milk, paneer/chena, paratha, parotta, khakhra, chapati/roti, and pizza bread.

• GST on packaged foods, snacks, sauces, chocolates, juices, coffee, ice cream, plant-based milk, soups, and baked goods reduced to 5% from higher slabs.

• Packaging materials like crates, cases, and packing paper brought under 5% GST, reducing production and logistics costs.

• GST on commercial trucks and goods vehicles cut from 28% to 18%, lowering freight rates and boosting supply chain efficiency.

Strengthening Food Security and Affordability

The GST reforms complement the Government’s ongoing food security initiatives under the National Food Security Act (NFSA), which ensures subsidized food grains for nearly 75% of the rural population and 50% of the urban population. The Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), extended for five years from January 2024, continues to provide free food grains to over 81.35 crore beneficiaries. Additionally, initiatives such as the Price Stabilization Fund and the distribution of Bharat Rice and Bharat Dal safeguard affordability for essential food items.

Impact on Industry and Consumers

The revised GST structure provides wide-ranging benefits across the agri-food value chain:

• Consumers: Reduced household expenditure on dairy, snacks, and packaged food.

• MSMEs & Regional Brands: Encouragement of demand in semi-urban and rural areas.

• Food Processing Units: Lower input and packaging costs, increased production volumes.

• Transport Sector: Reduced capital cost of vehicles, decreased freight rates, and improved efficiency for small truck owners.

• Global Competitiveness: Strengthened position of India’s food processing and logistics in international supply chains.

Boosting Logistics Efficiency

With trucks handling 65%–70% of India’s goods traffic, lowering GST on vehicles will significantly reduce freight rates per tonne-km, benefiting farmers, FMCG players, e-commerce companies, and exporters alike. Additionally, the reduction of GST on third-party insurance for goods carriages (from 12% to 5% with ITC) ensures comprehensive relief for transporters, particularly MSME operators.

The GST reforms mark a transformative step in making food affordable, industries competitive, and logistics efficient. By addressing classification disputes, ensuring tax uniformity, and lowering costs across the value chain, the Government has created a predictable and transparent framework. This move not only benefits consumers but also supports farmers, MSMEs, cooperatives, and industry leaders, while advancing national initiatives like PM Gati Shakti and the National Logistics Policy.

References:

Ministry of Food Processing Industries

Ministry of Finance

https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2163555

Ministry of Consumer Affairs, Food & Public Distribution

https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=1897933

https://dfpd.gov.in/pradhan-mantri-garib-kalyan-anna-yojana/hi