Mother Dairy cuts milk & dairy prices after GST reform

Mother Dairy has announced a reduction in prices across its portfolio of dairy and processed products, effective 22 September 2025, following the recent GST reforms (GST 2.0) in India. Key changes include: toned tetra-pack milk now priced at ₹75/litre, down from ₹77; a 500-g pack of butter reduced from ₹305 → ₹285; butterscotch cone ice cream lowered from ₹35 → ₹30. Products benefiting include butter, cheese, ghee, milkshakes, paneer and ice creams. Regular pouch milk remains unchanged, as it was already exempt from GST. Mother Dairy says its full portfolio now falls under either the zero tax bracket or the 5% GST slab.

Industry Insight:

This move by Mother Dairy is one of the first visible consumer-price responses to the broader GST restructuring (often dubbed “GST 2.0”), which seeks to reduce or eliminate indirect tax burdens on essential food and dairy items. By passing the tax benefit fully to consumers (“100% of the tax benefit,” per its MD), Mother Dairy is not just reacting to regulatory change, but also leveraging it for competitive positioning. Other major dairy/FMCG players may follow suit to maintain market share or respond to consumer expectations on price.

For the dairy value chain (milk producers, feed suppliers, input providers), the cuts may squeeze margins unless cost inflation is also tempered. Lower downstream prices can reduce producer pricing power in the short term, especially if input costs (like feed, energy, packaging) remain high. On the demand side, cheaper dairy products may boost consumption (especially processed dairy) which could increase upstream raw milk demand. Over multiple months, this could feed into higher demand for feed ingredients such as maize, depending on how quickly dairy processors scale up their purchase of milk and upgraded product lines.

Source : Dairynews7x7 Sep 2025 India Today