Govt. removes tax on milk powder imports

• Maximum retail price of 1 kg of milk powder to remain at Rs.945
• Minister Rambukwella stresses there’s no change in govt.’s policy of encouraging local dairy production

The Cabinet of Ministers this week reached a decision to remove all import taxes on milk powder to resume milk power imports to the country while maintaining the controlled prices unchanged in the local market.

As the Consumer Affairs Authority (CAA) refused to requests for a price hike of milk powder amid rising global prices, deprecation of the rupee and high freight charges, the importers halted importation of milk powder, leading to a milk powder shortage in the market.

As a solution to the current milk powder shortage, the Co-Cabinet Spokesman and Minister of Media Keheliya Rambukwella yesterday announced that the Cabinet of Ministers decided to remove all import taxes on milk powder to resume imports of milk powder without burdening the public.

The maximum retail price of one kilo of milk powder remains at Rs.945. 

In addition, the Cabinet of Ministers yesterday vested the powers with the Minister of Finance Basil Rajapaksa to study the matter and take necessary action to ensure that sufficient stocks of milk powder are supplied to the local market, according to the Government Information Department. 

Despite the move to remove taxes on milk powder imports, Rambukwella stressed that there’s no change in the government policy of encouraging local dairy production while assuring that the country is on its way to achieve self-sufficiency in diary production in the medium to long-term with plans already underway. 

He noted that 40 percent of the country’s demand for diary is already met with local production.  

However, the country’s annual milk production was in decline during past two years after peaking to 494.85 million liters in 2018. Last year, the milk production declined to 414.8 million liters, according to Department of Animal Production and Health (DAPH). The import expenditure on dairy products last year rose by 7 percent year-on-year to US$ 333.8 million.