Hatsun Agro, Parag Milk, Vadilal shares rally up to 2% after GST rate cut on dairy products

GST on condensed milk, butter, other fats and cheese has been reduced to 5% from an earlier 12%. The council has also decided to make Ultra High Temperature (UHT) milk and paneer completely tax-free by reducing the GST from 5% to zero, as per the official statement.

The new rates, which will be effective from September 22, are expected to make essential dairy products more affordable for consumers.

Following this, shares of Hatsun Agro Products (2.37%), Parag Milk Foods (1.95%), Dodla Dairy (0.76%), Vadilal Industries (0.05%) and Sheetal Cool Products (0.98%) were trading in the green on Thursday, while Heritage Foods was trading in the red (-0.45%).

"The reduction in GST rates on UHT milk and paneer to nil and dairy products like ghee, butter and cheese from 12% to 5% marks a significant development for the food and FMCG (fast-moving consumer goods) sectors. This move is expected to make these commonly consumed items more affordable, benefitting end consumers, particularly in price-sensitive rural and semi-urban areas," said Devendra Shah, Chairman, Parag Milk Foods Ltd.

"This will also benefit farmers, who are the backbone of this industry. Higher demand will allow farmers better income stability and the confidence to invest in better cattle care and feed. Over time, this can uplift rural livelihoods, strengthen the economy, and ensure that the growth of the organised dairy sector directly translates into a better quality of life for India's dairy farming families," Shah added.

Meanwhile, Mother Dairy on Thursday said it will pass on the benefits of the reduction in GST on a wide range of products to consumers. Mother Dairy is one of the leading dairy firms in the country. The company clocked a turnover of ₹17,500 crore in the last fiscal year.

Reacting to the decision of the GST Council, Manish Bandlish, Managing Director of Mother Dairy, said, "We commend the Union Government's decision to reduce GST rates on a wider range of dairy products, including paneer, cheese, ghee, butter, UHT milk, milk-based beverages, and ice creams."