MUMBAI/ NEW DELHI: India Inc is eyeing a bumper festival season, hoping that price cuts—which go beyond the GST reset in many cases—result in a rush of buyers in stores and revive consumer demand, helping more than offset the adverse impact of tariffs on the Indian economy.Sellers across ice cream parlours, grocery stores, and footwear outlets, as well as white goods companies and auto majors, are ready with new price tags, complying with the govt’s push to pass on the benefits.
Since GST Council decided on the rate reductions on Sept 3, companies have been working on the backend, sending circulars to distributors as mandated by the govt, uploading detailed price lists (old and new) on websites and speeding up production of new packs in factories.“All the brands where GST rates were cut have already lowered the prices in our stores. We have seen good Ganpati and Onam and we are all ready for good pujo sales,” said Shoppers Stop CEO and MD Kavindra Mishra.Compared with earlier prices, Baskin Robbins expects its customers to make savings of 10-11% on an average, said Mohit Khattar, CEO at Graviss Foods which runs Baskin Robbins in India. The company estimates its new packs with lower MRPs to be out in the market in about 15 to 30 days.Mayank Shah, vice-president at Parle Products said that communication has already been shared with its over 7,000 distributors and 100% of its SKUs are now aligned with the revised MRPs, reflecting price cuts. ITC, whose products reach nearly 7 million outlets, is also informing its trade partners about the changes. “During the transition period, physical products bearing both the old and new MRPs may be available in the market,” said executive director Hemant Malik.
While business houses are cheering govt’s decision to do away with mandatory stickering of all products in stocks, most FMCG companies expect the old stocks to be liquidated to a large extent. Godrej Consumer Products CEO Sudhir Sitapati said: “It is really a much-needed fillip to demand as we expect consumers to use the savings for discretionary spends.”While white goods and auto companies have complained of sales coming down after PM Narendra Modi announced the move in his Independence Day speech, several have managed with B2B sales as input tax credit is available.“Dealers have been booking orders for retail sales and we are ready to deal with higher deliveries and installation. Given that sales were weak this year due to a cooler summer, we expect the rate reduction to provide a significant boost.“Whatever has been the hit in the last few weeks will be more than made up,” said Blue Star MD B Thiagarajan.“Businesses are passing on more than the reduction because they expect volumes to rise,” said Piruz Khambatta, chairman of Rasna Group.There are some segments such as textiles and footwear, which are worried about the impact on sales of goods that cost over Rs 2,500. Liberty Shoes executive director Anupam Bansal said the company has lowered the retail prices of goods that cost up to Rs 3,000 by up to Rs 500 to ensure that consumers are better off. “We expect people to shift from unbranded segments to branded goods because of the GST reduction,” he said.Mother Dairy and Reliance Consumer Products (RCPL) are also offering lower prices on products originally priced at Rs 10 and 5. The price for such packs will be slashed by a mere Rs 0.5-1 but given that people usually tend to buy multiple packs of products priced at Rs 5, 10 and UPI payments becoming the norm, paying for them won’t be a problem. “Fresh production with revised pricing has already commenced in select categories like paneer and we are keeping a close watch on the transition to make sure this reform delivers its intended value to every consumer,” said Manish Bandlish, MD at Mother Dairy.Coffee, a popular favourite, will also get cheaper soon—Blue Tokai Coffee Roasters said that it has passed on the full benefit of the reduced taxes directly to consumers and its cafe menus are expected to reflect reduced prices by the end of the month.Page Industries, the exclusive licensee of Jockey International in India, said it is actively collaborating with its trade partners and franchisees to implement the required price changes.While govt has nudged businesses, industry bodies too are working with players. “Consumers will directly benefit as industry passes on the gains through lower costs and greater efficiency. At CII, we are working closely with our members to build awareness and ensure that the benefits of these reforms reach every stakeholder,” said CII DG Chandrajit Banerjee.
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