Expect a biscuit or two less the next time you buy a packet of India's staple biscuit.
Parle Products, the maker of world's largest selling biscuit Parle-G, will not increase prices to match a higher levy under the Goods and Services Tax. “A very practical solution is to knock a biscuit or two out to take care of the price increase due to higher tax,” said Mayank Shah, category head at Parle Products.
Biscuits costing up to Rs 100 a kilo attracted a value-added tax of 12-14 percent earlier. The rate has gone up to 18 percent under the unified tax regime across categories. Which means, there is no distinction now between low-cost and premium biscuits.
It will be difficult to increase the price of Parle-G as the consumer is extremely price conscious, and retailers too will find it difficult to provide loose change to the consumer, Shah said.
A 70-gram packet costs Rs 5 and the smallest pack sells for Rs 2.
Shah said GST will impact “a fair share of its volumes” of lower-priced biscuits, but he didn't share any numbers. Old packs are still in the market and the company will start rolling out the new ones in the next 30-45 days, he said.
Get More In Premium Brands
Ironically, premium biscuit fans will benefit. Biscuits that cost more than Rs 100 a kilo were earlier taxed at 20-22 percent. The levy has come down to 18 percent under GST. Parle will increase the pack sizes of premium brands instead of reducing prices.
The company's premium offerings include Hide & Seek and Milano. Shah said “you can expect a biscuit or two more here”.
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