GST Cut On Dairy To Boost Volume Growth, Shift To Organized Sector

Name: GST Cut On Dairy To Boost Volume Growth, Shift To Organized Sector | RS Sodhi On GST 2.0
Uploaded: 2025-09-29T01:41:38+00:00
Duration: 8 min 58 s
Channel: ET NOW
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00:00hi mr sorry thank you so much for joining us today uh you know let's start by talking about

00:04the gst cut from butter to ghee cheese paneer uh is this gut expected to aid volumes and if you

00:11could quantify that for us what kind of expectation do we have when it comes to volume growth

00:18well definitely this tremendous gst cut in most of the daily products are going to give us

00:27more than double digit volume growth in all the categories let me tell you most of the

00:37dairy categories in which the gst cut has been given be it ghee or paneer or the other sweets and other

00:48things unorganized sector is bigger than the organized or packed sector so what is going to

00:56happen with this reduction of prices right from five to thirteen percent one side the existing

01:03consumer is going to buy more more than that the unorganized sector will shift towards the organized

01:12packed category because earlier the difference between the unorganized sector ghee and the packed

01:19sector ghee was around 30 to 40 rupees in case of paneer it used to be around 20 rupees per kg so with this

01:30reduction one side volume growth will come second side adulteration will also reduce okay what is

01:36happened when you are selling in packed or branded form chances of adulterations are minimum because

01:43when you sign means anybody can do any hodgepodge so that way it is going to give us benefit and

01:51once the organized sector fails grow i think it will also give more benefit to the government

01:59their gst collection will definitely improve and in turn farmers are going to get better relations because

02:06transparency system will be more because of organized sector right so that's about volume growth and uh

02:14you know the kind of demand that we are going to see but uh mr sody how will this benefit the entire

02:19ecosystem if you could shed some more light on it you know from farming community to cooperatives and

02:24rural community and ultimately the final consumer how is it going to play out for the entire ecosystem

02:29well in food and agriculture supply chain there are two main stakeholders farmers and consumers so one

02:39side with reduction in gst consumers are going to get the benefit the other side farmers when they are

02:45dealing with the unorganized sector there is no price stability they are they are very vulnerable to the

02:54local producers they will buy milk with the organized sector growing system become more efficient

03:02transparency comes and farmers are encouraged to invest more in dairy and especially you see let me

03:10tell you last three years the farm gate prices are not increasing at that rate but it used to increase

03:18during the previous two years so what we expect now with this pricing for you or uh gsp reduction

03:27yes the consumer but better relation for the farmers or more related farmers definitely production of

03:35building trees so that companies can see the increased demand of dairy products from the market all right so

03:43that's about how the farmers and end consumers are going to benefit but uh mr sody within

03:48dairy which particular product category do you feel will uh reap the most benefit out of this gst rate cut

03:57yeah definitely the gst no well he is a 60 000 uh category per annum and i understand with this

04:07reduction reduction reduction reduction reduction reduction reduction reduction reduction reduction reduction

04:11from 10 percent to 5 percent around 40 rupees per kg i think that category will multiply by at least 50

04:19percent more from 60 000 to 90 000 the government is not going to lose much revenue the other categories which is going to get the maximum

04:29use the music is the ice cream ice cream ice cream 3000 which is the wheat which is

04:373..?

04:37for the 4 percent reduce the 5 percent, so 13 percent reduction reduction reduction reduction reduction reduction or

04:476500 rupees so there will be reduction of 25 rupees there also i feel with this reduction and shift to the

04:51online factor demand will multiply minimum 75 percent

04:55Similarly, butter, the table butter, there also reduction is 78%.

05:00So, butter category, I understand, in table butter, it will increase minimum, only white, 15 to 16%.

05:08And look at Paneer. Paneer will multiply because Paneer majorly was scored in un-packed, unorganized sectors.

05:16So, I believe Paneer demand will, in two years, double.

05:19All right. So, that's about demand and the kind of increase we are expecting there.

05:24But, you know, will this move help cooperatives also scale up procurement from farmers and add new members to their operatives?

05:33When the demand for the Paneer brandy present increases,

05:39so all the properties and other companies have to scale up their milk procurement system.

05:45So, how we can scale up the more milk procurement?

05:48We start milk collection from more villages.

05:50We put a milk collection system in more villages.

05:53We employ more members.

05:57And also, we ask existing members to supply more milk so that they can also buy more number of cows and buffalo to meet the increased demand.

06:08So, this increase in demand of wheat, butter, ice cream, paneer will definitely encourage organized goods to procure more from farmers.

06:22So, farmers are going to get much benefit out of this reduction in GST, more than the consumers.

06:28All right. Now, talking about the pricing and demand, you know, given that non-urban areas are more price sensitive,

06:35do you expect this GST move to aid demand, particularly in tier 2 and tier 3 cities and also rural areas?

06:41We are right, definitely, because the unackenaged sector, unbranded sector, brands, products are more selling in the PAP, PAP, PAP, or PAP, or PANICA, or rural markets.

06:58Because of the price difference, because of the price difference, so with this reduction in the price, even the consumers in the rural sector, they actually want to buy the branded products.

07:11So, now with the price difference, and most of the manufacturers also shifting more towards this transit side, I think the growth is going to come more from the rural, PAP, PAP market, than the metro market.

07:30Okay. And lastly, Mr. Suri, do we expect any new SKUs or smaller affordable packets to capture the rural and semi-urban demand following the GST rate cut?

07:41I don't expect any SKUs to be larger than the region, because already there are SKUs, like in these, 20 rupees, 300 rupees SKUs are there.

07:53And I don't expect it will, any lower MRP SKUs are required, because the price of existing SKUs will reduce.

08:02SKUs which used to be 10 rupees, now it will be selling at 9 rupees, or which was at 20 rupees, will be selling at 18 rupees.

08:08So, I don't think there is a need to launch new SKUs with reduction in GST.

08:15Only thing is, because demand is going to increase more in the rural, or PAP, PAP cities, so smaller SKUs will be selling more.

08:24Composition of the smaller SKUs in the existing range will increase.

08:28All right. Thanks, Mr. Suri, for that entire roundup of all, you know, how this GST rate cut is going to pan out for the dairy segment.

08:37Lovely speaking with you. Thank you so much for joining us today.

08:41Well, on that note, we'll take a way short break.

08:43Be right back with more news and updates coming up on the other side.

08:45All right.

08:57All right.