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The Economic Survey 2025, released on Friday, has recommended imposing a ‘health tax’ on ultra-processed foods (UPFs) to discourage their consumption. It emphasised the need for stricter regulations on these foods, which are heavily processed, calorie-dense, and linked to serious health risks.
UPFs — ranging from soft drinks, packaged snacks, and chocolates to sweetened cereals, frozen nuggets, and fries — offer minimal nutritional value while being loaded with excessive salt, sugar, and unhealthy fats. These foods, often dubbed “predigested,” are widely marketed and attract consumers through artificial flavour enhancements and appealing packaging. The issue worsens when major brands promote them as ‘healthy,’ particularly for children.
The Economic Survey highlighted the urgency of regulatory measures, recommending that the Food Safety and Standards Authority of India (FSSAI) establish clear definitions, labelling requirements, and stringent monitoring of UPFs. One of the most significant proposals is the introduction of a higher tax rate specifically targeting brands that advertise these unhealthy products.
The survey suggests that increased awareness campaigns in schools and colleges should be launched alongside existing health and lifestyle initiatives to educate consumers on the dangers of UPFs. Additionally, it recommends improved monitoring of branded products to ensure compliance with labelling and marketing standards.
Alarming trends in processed food consumption
The push for regulation comes amid a rapid surge in the consumption of ultra-processed foods in India. The survey cited a World Health Organization (WHO) report from 2023, which revealed that India’s spending on these foods skyrocketed from approximately $900 million in 2006 to $37.9 billion in 2019. Further, WHO India data shows that the retail sales value of UPFs grew at a compound annual growth rate (CAGR) of 13.7 per cent between 2011 and 2021.
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The Household Consumption Expenditure Survey (HCES) 2022-23 also indicated that UPFs account for a significant share of household food budgets—9.6 per cent in rural areas and 10.64 per cent in urban areas. Research has linked excessive UPF intake to cognitive impairment, depression, anxiety, obesity, heart disease, and long-term psychological distress, affecting both children and adults.
Combating misleading advertising of processed foods
Beyond taxation, the survey called for robust consumer protection mechanisms to address deceptive marketing practices. Products such as breakfast cereals, packaged juices, and chocolate malt drinks are frequently advertised as nutritious, often misleading consumers.
To counter this, the survey recommended banning UPFs in schools, hospitals, and public spaces while promoting incentives for healthier food production. It also suggests increasing GST rates on these foods and amending consumer protection laws to deter misleading advertisements. Additionally, it stressed the need for a coalition of civil society organisations and government bodies to educate the public and resist industry influence.
Learning from global models
India is not alone in its efforts to regulate UPFs. Countries such as Brazil, Canada, Chile, France, Mexico, Israel, Peru, the UK, and Uruguay have implemented the Nutrient Profile Model to enforce labelling and marketing restrictions, the survey cited. Denmark introduced a tax on saturated fats as early as 2011, while Mexico levied surcharges on sugary drinks and junk food. The survey further said that self-regulation has not been effective in curbing the consumption of UPFs.
The Economic Survey suggested that there is a pressing need to define strict nutrient thresholds for sugar, salt, and saturated fats to regulate advertising, mandate front-of-pack warning labels, and impose tighter marketing restrictions—especially for products aimed at children under 18.
