Gross Savings, Less Taxing

The move to cut GST on a host of regular household staples ahead of the festive season is expected to lift consumption which had just begun to show some initial signs of recovery after several sluggish quarters. Companies expect demand for products ranging from soaps, shampoos and hair oils to namkeen to get a boost.

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"This is a game changer. Barring sin goods, almost all food items are in the 5% tax slab, said Mayank Shah, vice-president at Parle Products which is betting on the GST rejigging to generate long-term demand revival. Shah, however, said that while bigger packs will see some price reduction, in smaller packs, the benefit of tax cuts will be largely passed on through increase in grammage.

The reduction in prices is, however, expected to reflect only on the new stock rolled out in the market, said an industry expert. For packs that are already on the retail shelves, it could be a challenge to do re-stickering. The large size packs could, however, be sold at discounted prices once the new prices kick in after Sept 22, the expert said.