A Boon for Dairy and Snacks: Lower Taxes, Higher Consumption

The reform extends its benefits to the dairy sector, with products like ghee, butter, and cheese transitioning from the 12% GST slab to the more favorable 5% slab. This move is expected to make these dairy staples more affordable, potentially increasing demand and farmer income stability. Industry leaders, such as Devendra Shah, chairman of Parag Milk Foods, have lauded the reform, anticipating a rise in consumption of branded dairy products and a potential decline in the reliance on unregulated alternatives. Similarly, ethnic snacks, including namkeens, bhujia, and mixtures, have also been moved from the 12% to the 5% slab. Rishabh Jain, CFO of Bikaji Foods International, noted that while the company is assessing the full impact, price reductions on family pack namkeens are being considered, signaling a positive outlook for snack manufacturers.

Empowering Retailers and Energizing Rural Markets

The All India Consumer Products Distributors Federation (AICPDF), representing over 450,000 distributors and 13 million kirana retailers, projects that these GST reforms could accelerate FMCG growth by an estimated 2-3 percentage points. This landmark adjustment is seen not just as a technical tax revision but as a strategic move to stimulate consumption, ease logistical pressures for traders, and fortify the supply chain from manufacturers right down to the last-mile retailer. The implementation date of September 22 provides adequate time for traders to manage inventory adjustments. Dabur India’s CEO, Mohit Malhotra, echoed this optimism, foreseeing an enhancement in consumer sentiment and purchasing power, especially with the festive season approaching. He highlighted the reform as a testament to India's consumption narrative, expected to invigorate demand in rural and semi-urban areas and boost branded FMCG products.

BANKING & FINANCE | THE MAG POST

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