Withdraw GST on milk products, say dairy farmers-The Hindu-28-07-2022

GS-1 & GS-2
Context :
Dairy farmers from States such as Haryana, Rajasthan, Uttar Pradesh and Kerala held protests here on Wednesday, urging the Centre to revoke the decision to impose a 5% GST on dairy products and 18% on dairy machinery.
Dairy industries in india :
India is the largest milk producer.

India is ranked 1st in milk production contributing 23 % of global milk production. Milk production in the country has grown at a compound annual growth rate of about 6.2 % to reach 209.96 mn tonnes in 2020-21 from 146.31 mn tonnes in 2014-15 .

The top 5 milk-producing states are: Uttar Pradesh (14.9%, 31.4 MMT), Rajasthan (14.6%, 30.7 MMT), Madhya Pradesh (8.6%, 18.0 MMT), Gujarat (7.6%, 15.9 MMT) and Andhra Pradesh (7.0%, 14.7 MMT).

The Government of India in association with the Department of Animal Husbandry and Dairying in June 2020 announced a $ 2.1 Bn infrastructure development fund with an interest subsidy scheme to promote investment by private players and MSMEs in dairy, meat processing and animal feed plants which in return is expected to create 3.5 million jobs.

The food processing ministry on Monday said its flagship scheme 'Pradhan Mantri Kisan Sampada Yojana (PMKSY)' has been extended till March 2026 with an allocation of INR 4,600 crore. PMKSY is an umbrella scheme incorporating ongoing schemes of the ministry like Integrated Cold Chain and Value Addition Infrastructure, Food Safety and Quality Assurance Infrastructure, Infrastructure for Agro-processing Clusters, Creation / Expansion of Food Processing and Preservation Capacities and Operation Greens.
Problem associated with dairy industries :
1.Breeding infrastructure and genetics: –The success of Indian dairy was• mostly due to rising number of animals not productivity. When the resources are limited, it is imperative to increase the productivity per animal. There is a high demand of good animal genetics, breeding infrastructure and advance breeding methods such as artificial insemination, embryo transfer etc.
2.Animal feed and fodder: –There is an acute and ever growing shortage of• green fodder and good quality feed. Growing trend of high breed animals is creating a huge demand for good quality feed and fodder to cater the dietary requirement of milking animals. Also in order to avoid many health and nutrition related complications prophylactic approach is driving the use of feed pre-mixes
3.Animal health:- Good healthcare and animal disease diagnostic solutions are• required to address the gap. As above high yielding animals demand extra care and over the years this trend is driving the animal health segment.
4.Farm mechanization:- Despite being the country of 1.25 Billion population• there is growing shortage and cost of labour. Farm mechanization is being welcomed by farmers to address the situation.
5.Cold chain infrastructure: –There is a lack of required infrastructure of• chilling plants and bulk coolers to prevent contamination and spoilage at village level. This segment is bound to see growth opportunities as the government and private sector is investing heavily in it in order to secure sufficient procurements.
6.Power availability:- Many chilling plants suffer due to shortage of electricity• and do not run optimally leading to poor quality and shelf life of milk. The opportunity within this segment could be solar powered milk chillers.
7.Quality testing infrastructure and trained work force:- Adequate quality• testing infrastructure is not available at milk collection centres. The problem is compounded by the lack of trained manpower to undertake quality testing. At the consumer end, the demand for safe food is emerging fast and thus creating high opportunity.
8.Processing equipment and food ingredients: Growing consumer awareness• and shifting lifestyle are forcing processors to move towards the product innovation and thus a growing demand of high quality equipment and various food ingredients.
Conclusion :
On account of a growing middle class, rising prosperity, changing food habits and level of awareness, the demand of milk and milk products is certainly going to increase on a rapid pace in the Indian market. The future of Indian dairy depends highly upon its ability of improving the backward chain integration and on the growth and competitiveness of emerging dairy sectors. An increasing magnitude of milk processing capacity is going to put a lot at stake on procurement of quality milk. In such scenario, there will be a lot of processors investing in developing the backward chain as well as to create cold chain infrastructure.