New Delhi: The Modi government recently announced major GST reforms, aimed at making daily-use items more affordable for common people. The GST Council approved just two simplified tax rates — 5 percent and 18 percent, which will come into effect from September 22. Products like biscuits, soaps, and toothpaste are expected to get cheaper under the new tax system.
FMCG Companies Say, Prices of Rs 5, Rs 10, Rs 20 Packs Won’t Change
However, a report by Moneycontrol reveals that FMCG companies do not plan to reduce the prices of small-value packs — like Rs 5 biscuits, Rs 10 soaps, or Rs 20 toothpaste. These are popular impulse-buy items, and their prices are already fixed at convenient round figures that consumers recognize and trust.
According to industry executives, changing these prices would confuse consumers. For example, selling a product for Rs 9 instead of Rs 10 could disrupt customer habits, especially in small towns and rural markets where people are used to buying fixed-price items quickly and without thinking much.
More Product, Same Price — That’s the New Plan
Instead of cutting prices, companies will increase the quantity of product inside the same priced pack. So, a Rs 20 packet of chips or biscuits will now contain more, giving customers better value. This method allows companies to pass on the benefit of the tax cut without altering the price structure.
Experts say this approach makes sense, as it avoids confusion and maintains smooth operations in the large, price-sensitive Indian market.
Companies Confirm Their Strategy
Rishabh Jain, CFO of Bikaji Foods, said that the company will increase the weight of small impulse packs so that consumers get more for the same amount. Similarly, Dabur CEO Mohit Malhotra confirmed that brands will definitely pass on the tax benefits to customers, and believes that lower taxes will boost demand for daily-use products.
