Despite the GST on many dairy products being slashed from 12 % to 5 %, Tamil Nadu’s state-owned dairy cooperative Aavin has not yet reduced the prices of its products. This has sparked public criticism and political pressure, as rival cooperatives like Amul and Nandini have already passed on the benefit to consumers.
Sources confirmed to The Federal that officials in GST Bhavan in Chennai will serve notice to Aavin for non-compliance. Sources said the GST office is likely to question why Aavin did not pass on tax benefits to consumers, as mandated under GST regulations.
Industry Insights (Dairy Focus):
In Tamil Nadu, Aavin’s decision to hold prices—even after the GST rate cut—stands in sharp contrast to the response of other cooperatives. Across India, cooperatives such as Amul, Nandini, and Milma have reacted swiftly: cutting prices of ghee, paneer, butter, ice-cream, chocolates and more by ₹25 to ₹40 per unit. Aavin, on the other hand, has claimed it has not received the formal state order needed to alter its prices, given that its pricing is calculated inclusive of GST.
Effectively, because Aavin’s current maximum retail prices already include the earlier 12 % GST, the GST revision has forced an internal adjustment in its base price structure—raising base prices so that the final consumer-facing price remains unchanged. Thus, consumers in Tamil Nadu are not seeing any relief, and in some cases may be paying marginally more.
From a competitive standpoint, this is a serious risk. Franchisees express concern that they lose edge compared to private and cooperative rivals who are cutting prices. Customers, especially in the lead-up to the festive season, are frustrated that they are not benefiting despite tax policy changes. Politically, parties including BJP and PMK have pressed the state government to intervene and direct Aavin to pass on the cuts.
For the dairy industry, Tamil Nadu’s case highlights how tax reforms don’t automatically translate into lower consumer prices—especially when pricing structures are inclusive of GST. Cooperatives and processors must anticipate how to disentangle base costs from tax components so that consumers benefit. Also, swift operational and administrative readiness to respond to tax changes is crucial to maintain credibility and competitiveness.
For Aavin to regain consumer trust and stay competitive, it must ensure that the GST benefit is passed on transparently and quickly. Its pricing model needs to be recalibrated, and state authorities must support timely directives. Otherwise, Tamil Nadu risks becoming laggard in a sector where responsiveness to tax shifts directly affects consumer sentiment and market share.
Source : Dairynews7x7 Sep 26th 2025 Federal and others