MUMBAI: Come Navratri and your grocery bills will drop—that large pack of namkeen, noodles, chocolate or your favourite ice-cream will cost you less.
This is because consumer goods companies will pass on the 7%-13% tax benefit incurred through GST cuts in two ways—by reducing prices of large packs and increasing grammage of small packs.
While the range of price cuts will vary across categories and for companies, a lot will also depend on how competition is strategising, firms have started to plan their pricing moves internally.
A host of FMCG players including Amul, Mondelez, Godrej Consumer (GCPL), Colgate and Kellanova said that they will pass on the benefit of reduced GST rates to consumers.
“We have 600 SKUs across our businesses that will benefit from GST reductions and we have started planning pricing strategies. This is a good opportunity for us to see spike in demand,” Jayen Mehta, MD at Gujarat Cooperative Milk Marketing Federation (GCMMF) which owns Amul told TOI .
Mehta said that for dairy categories such as UHT milk, butter, ghee and paneer, full benefits can be passed on to consumers given that the size of the packs are not very small. Mayank Shah, vice-president at Parle Products added that the full benefit will be passed on as per the anti-profiteering provisions; only the mode of doing it might vary.
Overall in FMCG, there could be an average price reduction of about 10% for consumers, said Dhairyashil Patil, national president at The All India Consumer Products Distributors Federation (AICPDF).
In India, consumption growth has been slow and uneven for the past several quarters—blame weak demand in urban markets where inflation hit consumers had cut back on purchases.
Alongside tax breaks and interest rate reductions, the GST boost will put more money in hands of the middle class consumers, bolstering FMCG volume growth.
“Urban consumers who represent 30% of the population but account for nearly 70% of packaged goods consumption will particularly feel this positive impact,” said Tarun Arora, CEO & whole-time director at Zydues Wellness.
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