GST rate cuts: FMCG companies moving fast to pass on benefits to consumers

After the announcement of rate cuts on around 200 items by the GST Council last week, FMCG companies are proactively looking at ways to pass on the benefits to consumers.

Godrej Consumer Products and Nestle India on Wednesday said they had reduced the prices of some products. Earlier this week, companies such as Marico and Dabur had also made similar announcements, and said they have asked trade partners to pass on the benefits to consumers on existing stocks immediately.

The companies will also be informing consumers via ads.

Sunil Kataria, Business Head, India and SAARC, Godrej Consumer Products, said: “We are committed to passing on the benefits of the reduced rates to our consumers and have initiated a 7-10 per cent price reduction on our products across hair colours, air fresheners, liquid detergents and deodorant categories. These reductions will be effective immediately, and would also be applicable on our existing stocks.”

He said the company is working closely with its distributors and channel partners to monitor that the reduced MRPs are being passed on to consumers. “Our intent is to offer maximum support to retailers and wholesalers so that the switch to the new pricing is seamless and quick. We also plan to communicate these price reductions through advertising on relevant platforms,” he added.

FMCG companies have said that there could be a transition time of two-three weeks before the new stocks with new MRPs hit the retail shelves.

A Nestle India spokesperson said: “For the categories with lowered GST rates, the company has either reduced MRP or added extra grams in line with the GST tax reduction. The company will be issuing advertisements in national and regional newspapers to communicate the customer benefits for all the relevant product units.”

“Our trade partners have been informed that post announcement of reduction in GST rates, we have discounted the relevant products to pass on the benefit of GST rate reduction and have charged on the invoice the reduced GST rates. The discounts will continue to appear on invoices till such time as stocks with either lower MRP or higher weight are available. Our partners have been requested to ensure that applicable benefit be passed on to the consumers by way of reduction in price irrespective of the printed MRP, with immediate effect.” .

The Finance Ministry has urged FMCG companies to pass on the benefits of the reduced GST rates to customers immediately. Additionally, the National Anti-Profiteering Authority was approved by the Cabinet recently.

Earlier this week, Dabur India announced primary discounts of 9 per cent on existing stocks to its trade partners. “Dabur has also revised downwards the MRPs of fresh production with immediate effect and these stocks will hit the shelves by next month. The average price reduction across categories, covering shampoo, home care and skin care, range between 8 per cent and 10 per cent,” the company said.

Meanwhile, companies like Marico said that while the new production has shifted to new reduced MRP immediately, it is either affixing stickers on products with reduced MRP or providing additional discounts to its trade channel partners.

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