Lower GST rates to boost market for packaged foods
Processed foods and juices, now taxed at a lower 5%, are expected to see a rise in demand, especially for smaller, single-serve packs in rural and semi-urban areas.
15 Sep 2025 | 52 Views | By WhatPackaging? Team
New lower GST rates under the recently announced GST 2.0 regime could significantly boost the market for packaged foods in India, according to an analysis by Frost & Sullivan. The report suggests that the new tax structure will narrow the price gap between loose and packaged products, encouraging consumers to switch to more formal, packaged options, particularly in the cereals, pulses, flour, and dairy categories.
The analysis highlights that key products like UHT milk and paneer, now with a zero tax rate, will see increased availability and affordability across the country. Similarly, staple bakery items such as chapati, pao, and parotta will also be tax-free, benefiting the quick-service restaurant (QSR) and street food sectors.
The report also points out that while the lower rates on popular, demand-elastic categories like snacks, noodles, and value-added dairy products could drive a significant increase in demand, some brands may choose to absorb these tax benefits to improve their profit margins instead of passing the savings on to consumers.
According to Dhruv Saxena, senior consultant, agri-food and nutrition growth advisory, Frost & Sullivan, the GST 2.0 regime is more than just a rate cut; it's a reset for the entire food and agriculture value chain in India. Brands that act quickly by adjusting prices and pack sizes to reflect the new rates are likely to capture market share and formalise the loose-to-pack demand. The report stresses that success will depend on how effectively companies convert this tax relief into sales velocity and lasting market gains before the market stabilises.