GST on feed material impacts growth


The animal feed industry uses many diverse raw materials and oil meals including soybean meal, which is one of the most important feed ingredients.

Hyderabad: Indian livestock industry has called for an exemption of both oil seeds and oil meals from GST to fuel its growth and help achieve the goal of doubling farmers’ incomes’, said The Compound Livestock Feed Manufacturers Association of India (CLFMA of India).

CLFMA represents over 200 members from all sub-sectors of the livestock industry such as feed producers, animal nutrition and healthcare, veterinary services, processing, distribution and retailing of meat.

Raghavan Sampathkumar, ED, CLFMA of India, who hailed GST as one of the biggest tax reforms of the country that subsumes many indirect taxes and helps streamlining several aspects of doing business, observed most of the agricultural raw materials and ingredients were exempt under previous tax regimes as well as initially when GST was introduced. However, subsequently both oil seeds and oil meals were brought under the 5 per cent rate by the GST council in September 2017.

The animal feed industry uses many diverse raw materials and oil meals including soybean meal, which is one of the most important feed ingredients. These are most affordable and nutritious sources of protein and energy due to their cost advantages versus alternatives, easy availability and presence of essential nutrients.

The tax on raw materials is hurting the entire animal protein sector significantly. Since scientifically-produced animal feed (which is used by farmers to increase animal productivity and food quality) is exempt, GST on feed raw materials like oil seeds and oil meals already resulted in significant increase the cost of production of feed. Feed costs contribute around 70 per cent of the cost of meat but the increase in the prices of major raw materials cannot be passed on to the farmers as meat, milk and egg prices are market-driven.

Feed additives are used by dairy, poultry and fish farmers and feed manufacturers to provide balanced and essential nutrients to the animals. They fall under different tariff codes of the Customs Tariff Act. Being one of the most critical inputs for overall health and improving productivity of livestock, the GST Council agreed to keep these products out of the GST and thus exempted only few products.

However, several other products, which are also essential feed additives, are currently not exempt from GST, which ultimately adds to the overall cost of feed. Also, since the feed as well as the end products are exempt from GST, this tax on feed additives/supplements increases the ultimate cost of end products such as meat, fish, milk and eggs.

He points out, “This is a key issue of not only farmers’ welfare but also for preventing consumer food prices (meat, milk and eggs) from rising, which will have multiple socio-economic and political ramifications.”

“Further, due to increased overall costs of production (mainly feed), India is losing its export markets to its competitors since we are not cost-competitive in the global market meat and eggs. Hence, the above issues are to be addressed on priority, if India needs to enhance exports from the meat and livestock sector,” he added.

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