GST 2.0 Transition: New Packs With Lower MRP Or Increased Grammage By December, Says Parle VP

The transition for fast-moving consumer goods (FMCG) companies after the Goods and Services Tax (GST) rate rejig has not been the easiest, according to Parle Products Vice President Mayank Shah. However, he added that by end of November or start of December, new packs with higher weights or grammages and lower prices will start rolling in.

Speaking at NDTV Profit's Ignite Conclave, Shah elaborated on the process of transitioning to the new GST rate cuts and said that there was "a bit of confusion" related to packet size, grammages and pricing. He highlighted that the lead time it takes for FMCG companies to make changes in their products and packages lies somewhere between one to one and a half to two months.

Therefore, he added, in the first phase of the transition lower MRPs will be visible for the larger or higher MRP packets. Smaller packets with lower MRP, which contribute to roughly 60-70% of volume in the market, will see this change happen gradually by end of November or start of December.

"A Rs 5 pack might go to Rs 4.50 or a Rs 10 pack might go to Rs 9... around two-thirds of the market is on those price points when it comes to FMCG products", he stated adding that "currently almost all lower MRP packs are being circulated at a non-standard price point."

The VP also commented on the impact of GST rates over competitiveness in the FMCG space, and remarked that competitiveness will likely intensify in a matter of six months when rates may again change.

Currently, he said, competitiveness will depend on how and if companies decide to "pass back" the benefits. Something which will play a part six months later as well, according to Shah.