Taxation of foods high in fat, sugar, and sodium in India: A modelling study of health and economic impacts

Background: Consumption of foods high in fat, sugar, and sodium (HFSS) and obesity are rapidly increasing in India. Taxing HFSS foods has been proposed as one of the policy interventions to promote healthier diets globally. This study estimates the effect of this approach on nutrient intake, diet-related disease, and associated health and economic burdens in India. Methods and findings: We use a nationally representative expenditure survey of 261,746 households, dietary requirements, and food composition tables to model individual nutrient intake. Consumer responsiveness to food price changes for three income terciles, captured in price elasticities, is estimated using an Almost Ideal Demand System model. Longer-term policy impacts are estimated through a novel dynamic microsimulation model, Health-GPS. Modelled policy outcomes include changes in risk exposures, disease incidence and burden, and total health expenditure. On average, 9.9% of total energy intake comes from HFSS items, based on the definition by the Food Safety and Standards Authority of India’s Labelling and Display Amendment Draft Regulations 2022. Applying the highest Goods and Services Tax (GST) rate of 40% on HFSS items is associated with a persistent average per capita decrease of 0.1705 kg/m2 (95% CI: −0.1709, −0.1700) in body mass index and 45.8 mg (95% CI: −45.9, −45.7) in daily sodium intake. Over 30 years, this could reduce annual disease incidence by up to 1.72% (95% CI: −1.78%, −1.66%) on average and prevent 0.63 million (95% CI: −0.71, −0.55) disability-adjusted life years per year from ischaemic heart disease, chronic kidney disease, stroke, diabetes, and asthma, reducing total health expenditure by US$601 million (95% CI: −624, −578) per year. Larger absolute health gains accrue to higher-income individuals, reflecting higher baseline HFSS food intake. Given substitution patterns and a price-inelastic demand, the tax change is expected to generate a 92.0% (95% CI: 88.2%, 95.7%) increase in tax revenue from foods and beverages with only a minor effect on household spending (+1.0%, 95% CI: + 0.0%, + 1.9%). This analysis only captures the potential health impacts of changes in energy and sodium intakes. In addition, it does not model underlying temporal trends in disease incidence beyond those due to demographic changes, which would make our health impact estimates conservative if baseline disease risks were to increase in the future. Conclusions: Higher taxation of HFSS foods could help mitigate rising incidence of diet-related diseases and morbidity in India, reduce healthcare costs, and serve as an additional source of revenue for the government. Why was this study done?: What did the researchers do and find?: What do these findings mean?: In a modelling study, Maxime Roche, Jingmin Zhu and colleagues analyse what the effect would be of taxing food items high in fat, sugar and sodium in India, assessing both the effect on population health and the economic impact.