GST boost missing, FMCG firms bet on gradual gain

Tax rate cuts have brought more difficulties for FMCG giants.

- Neethi Lisa Rojan & Vaeshnavi Kasthuril

India's fast moving consumer goods (FMCG) majors faced a challenging third quarter as the transition to the goods and services tax (GST) rate cuts and the country's new labour codes controlling the outcomes.

GST 2.0, which moved 90% of the items in the 28% tax slab to 18%, and most items with 12% to 5%, was expected to boost consumption. The Street widely expected people to shift to premium products or from unbranded consumer goods to branded ones. While price cuts did boost sales of a few larger electronic products or cars, the wider consumer sector still awaits a trickle-down effect.

In the short-term, the tax rate cuts have brought more difficulties for consumer giants, industry experts said.

Revenue growth for FMCG companies ranged from 2-6% year-on-year to a higher end of 27% in the December quarter.