India’s GST Council raised tax rates on ultra-processed and sugar-sweetened beverages (SSB) in 2025. The tax on aerated waters with sugar, fruit-based carbonated drinks, and caffeinated beverages increased from 28% to 40%. Other non-alcoholic drinks saw a rise from 18% to 40%. This move aims to reduce lifestyle diseases linked to these products.
Context of the Tax Increase
The government’s decision targets preventable health issues like obesity, diabetes, and cardiovascular diseases. High taxes on sugary drinks are not punitive but correct market failures. These beverages hide their social costs, such as health treatment and lost productivity. By taxing them heavily, the government prioritises public health over corporate profits.
Health Risks of Sugary and Ultra-Processed Foods
Studies show that consuming ultra-processed foods raises mortality risk by 62%. Sugar-sweetened drinks contribute to cancer and metabolic diseases. These products are designed to be addictive, encouraging repeated consumption. Children and lower-income groups are particularly vulnerable to their harmful effects.
Rising Consumption Trends
Household spending on processed foods has increased across all income groups. The poorest rural households rose from 3.2% to 5.5% of expenditure on these foods between 2011 and 2023. Urban and wealthier households show similar upward trends. This growing consumption imposes heavy costs on health systems and families.
Government Initiatives and Public Health Strategy
The tax hike aligns with India’s broader nutrition goals. Campaigns like Poshan 2.0 and Eat Right India promote healthy eating. The National Commission for Protection of Child Rights mandates sugar boards in schools to educate children. The government encourages millets and organic foods as alternatives to unhealthy processed options.
Challenges and Further Measures
Taxing unhealthy foods is complex due to economic and social concerns, especially for small industries and farmers. The Economic Survey 2025 recommends front-of-package labelling (FOPL) and stricter marketing rules. International examples show that taxes work best with clear warnings and education. India plans to strengthen consumer protection and reduce misleading advertisements, especially those targeting children.
Broader Impact and Future Directions
This tax reform marks a shift in India’s approach to diet-related health issues. It embeds the social cost of sugary drinks into their price to influence consumer choices. Continued efforts will focus on safer consumption of salt and fat in packaged foods. The government’s stance reflects a long-term vision for a healthier population.
Questions for UPSC:
- Discuss in the light of India’s GST reforms how fiscal policies can influence public health outcomes in developing countries.
- Critically examine the role of front-of-package labelling (FOPL) in consumer protection and its effectiveness in reducing non-communicable diseases globally.
- Explain the socio-economic challenges faced in regulating harmful food industries and suggest policy measures to balance economic interests and public health.
- With suitable examples, discuss the impact of lifestyle diseases on India’s healthcare system and economic productivity, and comment on government strategies to address these challenges.
