• Source:JND
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GST Reforms:  The 56th GST Council meeting held on September 3 announced major GST cuts across all sectors, marking a turning point in India’s indirect taxation landscape. However, the FMCG companies are hesitant to reduce prices on small packs priced at Rs 5, Rs 10, or Rs 20, citing that these price points align with consumer buying habits.

According to a report by Moneycontrol, the FMCG companies are reportedly planning to increase pack sizes by increasing the quantity while maintaining the same popular price levels.

What Do Industry Experts Say?

According to industry experts, products priced at Rs 5, Rs 10, or Rs 20 dominate consumer purchasing habits and reducing prices below these familiar thresholds would disrupt consumer buying experience and negatively impact demand.

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For instance, a product priced at Rs 20, including 18 per cent GST, would drop to Rs 18 after the rate was cut to 5 per cent GST. However, FMCG companies argue that these non-rounded price points do not align with consumer preferences, and Rs 5, Rs 10, or Rs 20 remain preferred price bands for consumers.

“Rs 18 is not a price which we want to have for the daily-use items. The Indian consumer is used to demanding products of the price band – Rs 5, Rs 10, and Rs 20. We don’t want to disturb this structure,” Moneycontrol quoted a senior executive of FMCG as saying.

“What we can do, is increase the volume of the packaged item proportionally, while keeping the price the same. Meaning, the size of the Rs 20 pack of a biscuit would increase," Moneycontrol quoted another company executive as saying.

Speaking to Moneycontrol, Rishabh Jain, CFO of Bikaji Foods International, said that the company is planning to add more quantity to its small, low-cost packs to fully pass on the GST benefits to consumers.

ALSO READ: From Kissan Jam To Horlicks, HUL Slashes Prices On All Products From September 22 | Check List

HUL Slashes Price On ALL Products

Following major GST cuts, Hindustan Unilever Limited (HUL) has slashed prices on its popular products, including Kissan Jam, Horlicks, Lux soap, and Dove shampoo. According to a newspaper advertisement, new rates will come into effect from September 22.