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With the GST Council putting several commonly used household, confectionery and personal care products under a lower tax slab from the current 28 per cent, the FMCG industry expects to see a huge boost in consumption.
Product categories such as chocolates, chewing gums, detergents, shampoos and other personal and beauty products will now attract lower taxes.
Abhneesh Roy, Senior Vice-President, Edelweiss Securities, said this is a positive move for the FMCG industry as affordability of products will increase and it will also give a boost to organised sector.
Krishan Arora, Partner, Grant Thornton India LLP, said that this move, will give a boost to many industries in the mass consumption space.
“In certain cases, it is also likely that this will bring down the total tax impact on certain items, even lower than the earlier (non-GST) regime, which will bring a relief not only for consumers but also for the industry,” he added.
While FMCG companies were awaiting the fine print, they said that they will look at passing on the benefits to consumers wherever possible.
Vivek Gambhir, Managing Director and CEO, Godrej Consumer Products Ltd, said, “We intend to pass on the benefits of reduced rates to our consumers. Given that penetration rates are low in many of our categories, we believe that more affordable and more accessible products will drive consumer demand and consumption.”
Vivek Karve, CFO, Marico Ltd, added that the reduction will make these products more affordable aiding consumption.
Other companies said that this will help boost rural demand. Ullas Kamath, Joint Managing Director, Jyothy Labs Ltd, said, “This move will also add further uptick in the rural demand which showed signs of improvement in the second quarter. Due to the easy GST compliance processes we will also see a lot of unorganised players shifting to organised sector leading to a healthy competition and more choice for the consumers.”
Companies said this demonstrated the government’s willingness to be open to industry’s views.
Praveen Jakate, Chairman and Managing Director, Hershey India, said, “We are pleased that the government is sensitive to industry concerns and inputs. The government has shown speed and openness in taking on board industry inputs.”
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