With the deadline for implementation of revised goods and services tax (GST) rates around the corner, fast-moving consumer goods (FMCG) companies are adopting different ways to pass on the benefits of reduced taxes. Measures range from distributor discounts to consumer schemes offering extra quantities at current prices, ensuring smoother transition to the new tax regime.
“All stocks in the company’s account have been stickered, if they are high priced. For smaller packet products, we are opting for pack offers,” said a founder of a Kolkata-based FMCG company. Explaining further, he said for a five-rupee packet, companies are opting for consumer schemes like one free unit with a few purchases since the Rs 5 price point cannot be altered.
Companies dealing in short shelf-life food categories such as bakery, dairy, ready-to-eat and snacking are offering additional distributor margins in the run-up to the deadline. “FMCG companies in the short shelf-life food category are also offering additional distributor margins till 21st September,” said Raja Banerjee, head of sales, Dreambake, one of the major packaged cake manufacturers.
Several firms are providing price-offs to distributors for clearing stocks, leading to consumer benefits such as lower pack prices or promotional offers like buy-two-get-one-free. Despite pressure on profitability, companies are assuring that reduced margins will not impact end-consumers.
“With the reduction in tax rates, we have decided not to increase MRPs this year. Instead, we are absorbing the higher input costs and adjusting them against the new taxation. This way, consumers get price stability, and wholesalers and retailers benefit from a smoother transition,” said Nikki Thakker, Founder and CEO, Entisi Chocolatier. Large FMCG companies like Nestle, Dabur and ITC are also aligning their strategies to pass on the rate cuts to the consumers.
Adding to the industry’s relief, the government clarified that re-labelling of maximum retail prices (MRPs) is not mandatory. The Ministry of Consumer Affairs said manufacturers may like to voluntarily affix additional revised price stickers, on unsold packages manufactured before 22nd September 2025, provided the original price declaration on the package is not obstructed. Businesses, however, remain responsible for clearly communicating new prices to distributors and consumers.
“We have initiated an extensive exercise of informing all trade partners about the price revisions of our products across categories so that the commensurate benefits arising out of revised GST rates are passed on to the end consumer. Necessary steps are also being taken to notify consumers about the ensuing benefits,” said B Sumant, Executive Director, ITC Ltd.