GST 2.0 could undermine dietary health, Pg7

Key Highlights:

• India is set to simplify its GST rates into two main slabs, 5% and 18%, with a special 40% bracket for "sinful" and ultra-luxury goods on September 22.
• Many everyday foods will become cheaper, such as pizza bread dropping from 5% to zero.
• Sugar-based products, including sugar-boiled confectionery, chocolates, jams, and fruit jellies, will move from 12-18% to 5%.
• Aerated and other sugar-based drinks, by contrast, will move to 40%.
• The Supreme Court gave the Food Safety and Standards Authority of India (FSSAI) three months to finalize recommendations on food labelling.

Detailed Insights:

• The GST 2.0 revamp moves a range of sugar-based, calorically dense, and nutritionally poor foods to the 5% bracket, which may negatively impact public health.
• Without trustworthy food labelling, blanket affordability gains can tilt demand in favor of unhealthy products.
• Modelling and real-world studies have found that similar taxes have reduced consumption in Asia and Africa by 2.5-19% and nudge reformulation, especially when accompanied by labels and advertising restrictions.
• A public health consensus published earlier this month also called for warning labels, the use of WHO-SEARO or ICMR-NIN thresholds, and a science-led process insulated from industry capture.
• If India adopts a mandatory “high in” warnings system with robust thresholds, GST can also be differentially applied to compliant and noncompliant products.
• Since 2020, FSSAI rules have banned ads or the sale of HFSS (high in fat, sugar, salt) foods within 50m of schools.
• If a product carries any “high in” warning, it can’t be advertised to children, can’t be advertised during peak child-viewing hours, and should have restricted placement options on media platforms.

Key Concepts Involved:

• GST (Goods and Services Tax): An indirect tax for domestic consumption levied on most goods and services sold for domestic consumption.
• FSSAI (Food Safety and Standards Authority of India): A statutory body responsible for ensuring the safety and standards of food in India.
• HFSS (High in Fat, Sugar, Salt): Foods that contain high levels of fats, sugars, and salt, often considered unhealthy.