HS Code Guide · EPM Subvention
HS Code 040110 Meaning — Milk & cream, not concentrated, ≤1% fat: Global Trade, India & Factoring Guide
HS 040110 covers milk & cream, not concentrated, ≤1% fat. This guide explains what the code includes, its global trade, India's position, how GIFT City helps factor it, and whether MSME factoring qualifies for the 2.75% interest subvention.
What this HS code covers
HS 040110 sits in 04 — Dairy produce. Official tariff description: “Dairy produce; milk and cream, not concentrated, not containing added sugar or other sweetening matter, of a fat content, by weight, not exceeding 1%” In plain terms, it covers milk & cream, not concentrated, ≤1% fat. Classification decides duty and documents; this 6-digit line is in the DGFT positive list (Trade Notice 25/2025-26 Annex V), so MSME factoring under it qualifies for the 2.75% subvention — details below.
What is HS 040110?
HS 040110 is the entry for low-fat fresh milk and cream — typically skimmed milk (≤1% fat), not concentrated or sweetened, sold chilled for direct consumption or as industrial input.
Official description: Dairy produce; milk and cream, not concentrated, not containing added sugar or other sweetening matter, of a fat content, by weight, not exceeding 1%
What HS 040110 does in trade
- Classifies low-fat liquid milk so customs can apply the right tariff and SPS checks — fat content is the differentiator (040110 ≤1%, 040120 1–6%, 040150 >10%).
- Controls whether dairy export factoring qualifies for 2.75% — dairy is in the positive list, but only HS-lines listed qualify; 040110 is eligible.
- Affects exporter economics: liquid milk is perishable/low-unit-value, so most Indian dairy exports cluster in powders (040210) rather than 040110; this line matters for niche fresh shipments.
Global perspective — where HS 040110 moves
Global milk trade is dominated by powders and UHT, not fresh low-fat milk, because of perishability. Fresh milk is largely regional. Powders from New Zealand, the EU and US set world prices. 040110 is a small-volume code globally compared with 040210/040221.
| Top global exporters | Top global importers |
|---|---|
| Germany | China |
| France | Netherlands |
| Netherlands | Germany |
| New Zealand | Italy |
| Belgium | United Kingdom |
India's stance on HS 040110
India is the world's largest milk producer (~24% of global output) but a modest exporter of liquid milk; exports lean to milk powders, ghee and casein. 040110 volumes from India are small — most dairy MSME factoring sits in powders/butter. NDDB/Amul cooperatives dominate the chain.
Export docs to watch
Dairy exports need APEDA/Animal Quarantine clearance, FSSAI compliance and veterinary health certificate. Fat % must match the declared HS.
GIFT City — factoring HS 040110 in foreign currency
Dairy receivables factored via India-based AD bank or GIFT City both qualify — pick based on currency (INR vs USD) and buyer location.
Trad can route eligible invoices via an IFSCA-regulated IBU or Finance Company/Finance Unit undertaking factoring in GIFT City. The 2.75% subvention is identical whether you factor via India (RBI-regulated) or GIFT City (IFSCA-regulated) — the choice is about currency, banking relationship and buyer location, not the benefit rate.
Common financing stack for this HS
Factoring advances 70–90% in 24–48 hours after invoice verification; balance minus discount/fees on buyer payment. Works alongside packing credit — factoring covers the post-shipment open-account gap.
MSME subvention — is HS 040110 eligible for 2.75%?
Yes — HS 040110 is in the positive list (Trade Notice 25/2025-26 Annex V). MSMEs involved in international value chains with a valid active IEC (not in DEL) and valid Udyam can claim 2.75% per annum on the factoring interest cost element when factoring via an RBI/IFSCA-regulated entity.
| Check | For HS 040110 |
|---|---|
| In positive list (HS-6) | Yes — 040110 listed in Annex V |
| Benefit | 2.75% p.a. on interest cost element |
| Annual cap | ₹50 lakh per MSME per FY |
| Valid from | Prospectively from 20 Feb 2026 |
| Need UIN per factor? | Yes — declaration of intent before factoring, valid till FY-end |
| Eligible factors | RBI-regulated (AD bank / factoring NBFC) or IFSCA-regulated (GIFT IBU/FC) |
| Not covered | Deemed exports (FTP Ch.7) & exports to SEZs |
Eight-digit HS? Use first 6 digits
Eligibility is at HS-6. If your 8-digit HS (e.g. 04011010) starts with 040110, it inherits this eligibility. Verify on the HS checker — enter 6 or 8 digits.
Check HS 040110 — free
Verify any 6 or 8-digit HS against the DGFT positive list and see the 2.75% factoring eligibility in seconds.
Open HS checkerFrequently asked questions
What is HS 040110 — Milk & cream, not concentrated, ≤1% fat?
HS 040110 is the entry for low-fat fresh milk and cream — typically skimmed milk (≤1% fat), not concentrated or sweetened, sold chilled for direct consumption or as industrial input.
Is HS 040110 eligible for the 2.75% interest subvention?
Yes. HS 040110 is in the DGFT positive list (Trade Notice 25/2025-26 Annex V, 4139 HS-6 lines). MSMEs factoring exports under this line via RBI/IFSCA-regulated factors can claim 2.75% per annum on the interest cost element, capped at ₹50 lakh per MSME per year, prospectively from 20 Feb 2026. Requires valid IEC (not in DEL), valid Udyam, and a UIN per factor obtained before factoring.
Who can claim the 2.75% for HS 040110 and how?
MSMEs (as defined by Ministry of MSME) with active IEC and Udyam, factoring eligible exports of HS 040110 via RBI/IFSCA-regulated entities. File a declaration of intent on the DGFT portal to get a UIN per factor (valid till FY-end), factor the invoice, the factor files monthly IEC-wise claims; subvention is credited to your IEC-linked bank account.
Can HS 040110 be factored via GIFT City?
Yes. IBUs and Finance Companies/Finance Units undertaking factoring in GIFT City (IFSCA-regulated) are eligible financial institutions under IFSCA circular 19 Mar 2026 and must extend the 2.75% benefit. Useful for USD/EUR receivables where you want foreign-currency factoring.
What does factoring for HS 040110 cost after subvention?
Indicatively, factoring discount/interest is priced commercially (often 8–12% p.a. depending on buyer, tenor, currency) plus factoring fee ~0.5–3% ⚠️. The 2.75% offsets only the interest element — e.g. a 9% interest cost becomes ~6.25% effective on that element if eligible. Fees/insurance/FX remain. Compare all-in cost.
Related HS codes
Compare HS 040110 with other MSME-export lines in the same chapter or family.
See all codes on the HS code guides hub, or read the 2.75% subvention deep-dive.