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Why the Economic Survey wants warning labels and higher taxes on ultra-processed foods

With ultra-processed food sales surging, the Economic Survey rejects star ratings, seeks practical measures

4 min readUpdated: Jan 29, 2026 07:39 PM IST

The survey points out that the government should explore taxing these foods at the highest slab of GST, with a surcharge on products exceeding thresholds for sugar, salt and fat. (Source: Pixabay)

Marketing restrictions, warning labels, and the highest tax slab with surcharges — these are some of the measures suggested by the Economic Survey for addressing the challenge of increasing consumption of ultra-processed foods (UPF). Importantly, the survey recommends against a health-star rating system — where packaged foods receive zero to five stars based on their nutritional value — that the country’s apex food regulator had previously pushed for.

This is the second year in a row that the survey has taken note of the health impact of ultra-processed foods.
There has been a 40-fold increase in the sales of ultra-processed foods in India, increasing from $9 billion in 2006 to nearly $38 billion in 2019. “It is during the same period that obesity has nearly doubled in both men and women,” the survey says.

What are ultra-processed foods (UPF)?

These are essentially industrial formulations, containing ingredients unavailable in a kitchen such as chemical-based preservatives, emulsifiers, sweeteners and colouring. They contain little to no intact whole foods and are designed to be convenient and extremely palatable.

Labelling norms

To ensure that people consume healthier foods, low in sugar, salt, and fat content, the Food Safety and Standards Authority of India (FSSAI) first released a draft notification in 2022 for a front-of-pack star-rating system. The Indian Nutrition Rating (INR) — which would see the unhealthiest foods carry a 0 star rating and the healthiest carry a five star rating on the front of the pack — was chosen by FSSAI based on a survey conducted by the Indian Institute of Management.

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This was questioned by experts stating that a food item with a one-star rating could also be considered to be healthy by people because there would be a star on it. There would be no way to negatively mark unhealthy food items, with the experts instead suggesting a warning label or a colour-coded system which displays whether a food is high in fats, salts, and sugars.

“Studies have shown that warning labels are the most effective option for discouraging UPF consumption, compared with ranking-style labelling schemes such as … Health Star Ratings. The authors recommend that warning labels be added to UPFs or HFSS (high fat, sugar and salt) foods targeted at infants and toddlers,” the survey said. Dr Arun Gupta, convenor of Nutrition Advocacy in Public Interest, said, “The survey has taken into account scientific evidence that shows that warning labels are more effective in reducing consumption of ultra-processed foods. Star-rating also leaves space for industry to manipulate the rating, which is not good when it comes to the health of people.”

Marketing and taxation

The survey also suggests exploring measures such as a ban on advertising of UPF products between 6 am and 11 pm, citing examples of such marketing restrictions in countries such as Norway and the UK. “Restriction on advertisement is a key step towards reducing consumption. Unless we tackle advertising, the warning labels will not have much impact. Once a person is convinced that they want a product, that it is as good as real food, they will buy it. So, it is important that they are not convinced of it,” said Dr Gupta.

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The survey points out that the government should explore taxing these foods at the highest slab of GST, with a surcharge on products exceeding thresholds for sugar, salt and fat.

Anonna Dutt

Anonna Dutt is a Principal Correspondent who writes primarily on health at the Indian Express. She reports on myriad topics ranging from the growing burden of non-communicable diseases such as diabetes and hypertension to the problems with pervasive infectious conditions. She reported on the government’s management of the Covid-19 pandemic and closely followed the vaccination programme. Her stories have resulted in the city government investing in high-end tests for the poor and acknowledging errors in their official reports. Dutt also takes a keen interest in the country’s space programme and has written on key missions like Chandrayaan 2 and 3, Aditya L1, and Gaganyaan. She was among the first batch of eleven media fellows with RBM Partnership to End Malaria. She was also selected to participate in the short-term programme on early childhood reporting at Columbia University’s Dart Centre. Dutt has a Bachelor’s Degree from the Symbiosis Institute of Media and Communication, Pune and a PG Diploma from the Asian College of Journalism, Chennai. She started her reporting career with the Hindustan Times. When not at work, she tries to appease the Duolingo owl with her French skills and sometimes takes to the dance floor. ... Read More