Propelling India’s Food Processing Sector: Why GST Parity On Nuts Matter

India’s food processing sector is at an inflection point, driven by rising domestic demand and enabling government policies. As the country moves toward becoming a global leader in food innovation, healthy snacking such as almonds & alike stand out as a highly versatile ingredient with immense potential. Deeply embedded in Indian culture, nuts and particularly almonds have long been valued for their nutritional benefits, playing a central role in traditional diets, festivities, and Ayurveda. 

While historically consumed whole or in sweets, nuts such as almonds are now emerging as a key ingredient in India’s fast-growing food processing industry. However, a significant barrier to unlocking this potential is the current Goods and Services Tax (GST) structure.

Despite belonging to the same tree nut family, almonds and pistachios are taxed at 12 per cent, significantly higher than walnuts and cashews, which are levied at just 5 per cent. This discrepancy creates a competitive imbalance, hindering the growth of India’s nuts-based value-added sector, constraining micro, small and medium enterprises (MSME) expansion, and making this nutrient-rich commodity less accessible to consumers. Importantly, this differentiation in tax treatment did not exist before the GST era. Under the earlier VAT regime, almonds and other nuts—including cashews and walnuts—were uniformly taxed at 5 per cent in more than 16 states, with no distinction between them. 

As GST continues to evolve through extensive consultations and stakeholder engagement, aligning the current structure with the principles of simplicity and equity—much like the approach seen under the VAT regime—could help resolve longstanding industry concerns and support India’s broader economic ambitions in addition to India’s focus on health eating of foods like almonds. While there have been delays, the ongoing discussions reflect a willingness to revisit legacy issues in a spirit of collaboration, and a rationalised GST framework for almonds could be one such positive step forward.

Almonds are a highly versatile ingredient with numerous health benefits. Available in over 14 different forms - from diced or chopped almonds that add texture and crunch as coatings, fillings, or toppings, to almond flour for thickening and almond butter for spreads - almonds play a vital role in both traditional and modern cuisine. 

However, India's per capita consumption of almonds stands at just 0.2 kilograms. This is in stark contrast to countries like the US, Germany, and Italy, where consumption often exceeds 1 kilogram per person. Almonds stand out for their nutrient-dense profile, delivering 15 essential nutrients, including fibre and protein, along with antioxidants that promote overall well-being. 

Research published in peer-reviewed journals has consistently highlighted their health benefits. Important research conducted in India has shown that consuming almonds before meals can help improve blood sugar levels in individuals with pre-diabetes, a crucial benefit for a country where over 7.7 lakh adults suffer from diabetes.

The food processing industry in India is a significant economic driver, growing at an average annual rate of about 8 per cent and contributing 14 per cent to the GDP of the manufacturing sector and 13 per cent to the country’s exports. Importantly, it is also one of the largest employment generators within India’s organised manufacturing sector, offering livelihoods across a wide spectrum—from rural entrepreneurs to large-scale industrial workers. Rationalising GST rates for almonds could provide a crucial boost to this high-potential sector by reducing input costs for manufacturers and facilitating the production of value-added products such as almond milk, butter, and snacks. Lower

GST rates for ingredients could help unlock growth in downstream processing activities, thereby creating thousands of new jobs across supply chains. This approach could particularly empower SMEs, which have been instrumental in advancing India’s food processing industry.

India has identified healthy eating as a strategic priority. Reducing GST duties to foster innovation in the almond value-added industry is consistent with efforts to promote consumption of nutritious, healthy, and plant-based foods. It has been observed that plant-based foods that achieve both taste and affordability compared to conventional alternatives hold significant market potential. In India, the vegan food market reached  Rs 12,552 crore in 2023, and analysts expect it to grow to  Rs 29,718 crore by 2032, exhibiting a CAGR of 10.04 per cent during 2024-2032. 

Globally, the plant-based food market is also poised for substantial growth. Within the tree nut segment, almonds have emerged as the leading nut in new product developments, with over 12,000 global new product launches. In India alone, there has been a fourfold increase in almond product introductions since 2015, including fast-growing ingredients such as almond paste, almond flour, almond protein, and almond butter used in plant-based snacks. The sheer size of this market opportunity presents tremendous potential for the Indian food processing sector, not only to meet domestic demand but also to cater to global consumers.

The Ministry of Food Processing Industries has played a pivotal role in driving the sector’s growth through enabling policies, with exports identified as a key driver. Union Minister Shri Chirag Paswan has also underscored the immense potential for Indian processed foods in global markets, setting an ambitious target to increase value-added exports by 40 per cent in the next 3-4 years. 

Achieving this vision requires a strong push for high-potential products, and nuts such as almonds present a significant opportunity to position India as a global hub for plant-based, nutritious foods. A critical step in realising this potential is ensuring a level playing field. Reducing GST to align all tree nuts at 5 per cent would make this nutrient-rich ingredient more accessible to Indian consumers while also strengthening India’s food processing industry. Lowering tax barriers achieves the dual goal of boosting nutritious diets and enhancing the competitiveness of Indian value-added almond products in export markets. With India on its path to becoming a developed economy under Viksit Bharat, now is the time for decisive action.