UK to Expand Sugar Tax to Packaged Milkshakes and Lattes: What is India’s Sweet Policy?
The Soft Drinks Industry Levy (SDIL) was introduced in April 2018 under the Conservative government to incentivize beverage manufacturers to reduce sugar levels.
In a bold move aimed at curbing obesity, the United Kingdom government is set to expand its Soft Drinks Industry Levy (SDIL), more commonly known as the sugar tax to include pre-packaged milkshakes and lattes.
The decision, led by Health Secretary Wes Streeting, will end the exemption that milk-based drinks have enjoyed since 2018 and extend taxation to beverages with added sugars sold in supermarkets.
The policy shift shall not affect freshly prepared drinks served in cafes and restaurants, but will encompass milk substitutes such as oat and rice-based beverages if they contain added sugars. The government is also considering a reduction in the sugar threshold from five grams to four grams per 100 ml, in a bid to tighten the rules further.
Officials have proposed a “lactose allowance” to account for naturally occurring sugars in milk while ensuring products with added sweeteners face appropriate levies. The reform is part of a broader strategy to reduce childhood obesity and promote healthier dietary habits amidst UK citizens.
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Origins of the Sugar Tax in the UK
The Soft Drinks Industry Levy (SDIL) was introduced in April 2018 under the Conservative government to incentivize beverage manufacturers to reduce sugar levels. The tax applies to producers of pre-packaged drinks, charging 18 pence per litre for drinks containing 5-8 grams of sugar per 100 ml and 24 pence per litre for those exceeding 8 grams.
Since the rollout, the levy has led to a 46% average reduction in sugar content across reformulated beverages between 2015 and 2020. The UK Treasury estimates that the tax collected not only raised millions towards public health funds, but also contributed to a noticeable decline in average sugar consumption among children.
However, despite measurable success, studies indicate that children in the UK still consume over double the recommended daily sugar intake, pushing this latest expansion to milk-based drinks.
India’s Parallel Path: GST and “Sin” Taxing
India, while lacking a dedicated “sugar tax”, has been tightening its fiscal measures around sugary and aerated beverages through its GST framework. In the latest 56th GST Council meeting which took place between 3-4 September, 2025 saw the government raise the GST rate on sweetened, carbonated and aerated drinks from 28% to a new 40% slab - which is the highest tax rate in the GST structure.
This new rate applies to fruit-based fizzy drinks, carbonated fruit beverages and non-alcoholic flavoured drinks. The change follows growing concern about India’s escalating health burden, with obesity and diabetes now classified as key public health priorities.
The Food Safety and Standards Authority of India (FSSAI) has also called for stricter taxation on foods high in fat, sugar and salt (HFSS), pushing for clearer labeling and consumer awareness. Currently, sugar is taxed at 5%, but the combined impact of GST and compensation cess on beverages, in effect, mirrors a “sin tax” structure akin to that of the UK’s SDIL.
India: The “Diabetes Capital” with a Sweet Tooth
India’s struggle with lifestyle diseases remains stark with over 101 million Indians being diabetic and another 136 million being pre-diabetic as per recent studies by the Indian Council of Medical Research (ICMR). With such staggering figures, experts often refer to India as the “Diabetes Capital of the World.”
Public health experts suggest that a sugar-content-based levy, modelled on the UK framework, could yield dual benefits: one - push manufacturers to reformulate high-sugar products and, two - fund healthcare and awareness programs. However, India’s informal market, complex distribution chains and sensitivity to price fluctuations pose practical hurdles to a direct adoption in a market where the white crystal remains ubiquitous.
Still, the government’s gradual pivot towards reducing sugar consumption - effectuated through higher GST rates, FSSAI policy, and growing public discourse is indicative of a shift toward taxing sweetness for better health outcomes.
As London tightens the lid on milkshakes and lattes, New Delhi is already stirring its own tax blend on sugary products.
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