GST Rate Reductions Boosting FMCG Sector: Prices of Daily Essentials to Decrease
The Indian government's decision to simplify the tax structure and reduce the number of Goods and Services Tax (GST) slabs from four to two has been met with positive responses from the business community, particularly in the Fast-Moving Consumer Goods (FMCG) sector.
The new GST regime will now have 5% and 18% slabs, with everyday essentials such as soaps, toothbrushes, hair oil, snacks, chocolates, and instant coffee attracting the lower 5% rate. This reduction is expected to translate into greater value for consumers, according to Emami Limited, and is seen as a greater value passed to consumers by companies like Zydus Wellness.
For domestic enterprises and international entities looking to expand in India, the simplification of the tax structure enhances the ease of doing business. The FMCG sector's resilience is tied to consumer sentiment, and these measures provide the catalytic boost needed to sustain that resilience.
Emami Limited prioritizes passing on the GST benefits to consumers as soon as possible, while Godrej Consumer Products Limited (GCPL) welcomes the government's initiative of lowering taxes to boost consumption. Saugata Gupta, MD & CEO of Marico Limited, believes these reforms will empower households, foster consumption-led growth, and act as a catalyst for inclusive economic growth.
The reduction in GST is seen as an important step towards creating a consumer-friendly economy. For MSMEs and regional businesses, a more rationalized tax structure provides fertile ground to scale and innovate, further democratizing growth.
The GST rate cuts could reshape demand patterns over the next 12-18 months, particularly affecting urban consumers who account for nearly 70% of packaged goods consumption. The industry can expect three shifts: greater rural penetration as affordability improves, faster adoption of digital-first consumption models, and an acceleration of wellness-focused choices as families prioritize nutrition, preventive health, and self-care.
Aasif Malbari, chief financial officer of GCPL, is committed to ensuring that the GST rate reduction benefits are passed on to consumers, while Tarun Arora, CEO & whole-time director of Zydus Wellness, expects the GST reduction to enable the company to expand categories and drive higher volumes.
The revised GST rates will come into effect on September 22, 2025. The government's decision has the potential to spur consumption across all segments in the country, as per Emami Limited, and the reforms in the GST regime are expected to stimulate economic momentum and build long-term growth in the FMCG sector. Harsha Vardhan Agarwal, vice chairman & MD of Emami Limited, has expressed that the government's move to reduce GST is a game-changing one.
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