FMCG sector to benefit from GST

FMCG sector to benefit from GST

One of the fastest growing sectors, FMCG, is expected to benefit from the GST. Though experts say there might be some initial teething troubles, they won’t impact the FMCG sector.

“The FMCG industry is ready to see a vitalisation in the coming time with the rollout of GST. The rates for most of the fast moving consumer goods have been kept on expected lines, keeping in mind their mass consumption pattern. The packaged juices, Ketchup and sauces will fall under the tax slab of 12%, whereas products like pastas and noodles, mayonnaise, salad dressings and mixed condiments, will come under the 18% slab,” FieldFresh Foods CEO Yogesh Bellani said.

Videocon COO C M Singh said that GST Council’s announcements this month brought clarity among distributors and has enhanced trade sentiments. “We are hoping that in the initial two to three months the industry will get attuned to the implementations of GST. Also, we look forward to the festive season now which will arrive early this year and we are certain that the sales will further rise eventually,” Singh said.

Experts point out that the FMCG sector will gain due to the shift from the unorganised segment to the organised one.

Desai Brothers - Food Division (Mother’s Recipe) Head Business Development Sanjana Desai said that the GST promises to integrate the country’s multi-layered indirect tax system into a single unified one, improving the ease of doing business on a large scale in India.

“At the backend, the proposed unified tax system will reduce transportation cycle times, enhance supply chain decisions and consolidation of warehouses. These factors coupled with categorisation of several consumer products under the 18% tax bracket is definitely a positive news and is expected to reduce cost and taxes leading to cheaper consumer goods,” Desai said.

However, Desai added that some of the mass consumption items pertaining to food processing like pickles, sauces, instant mixes and others have been placed under the 18% tax rate, could have been considered in the lower tax bracket to maintain product pricing for end consumers and also to encourage the food processing sector particularly in the Indian spices category.

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