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FMCG companies - government provides breather by easing GST rate cut norms

ICICIdirect Research 19 Sep 2025 DISCLAIMER

Since the GST rate rationalization announcement, FMCG companies have started to pass on the benefits to the consumers in the form of price cuts or grammage increase.
HUL recently reduced prices on products like Dove shampoo, Lux, Lifebuoy soaps, Kissan Jam, and Horlicks in the range of 8-15%. Nestle has adjusted Maggi prices and also adjusted the grammage, increasing the packet size from 280g at Rs 60 to 300g at Rs 58, with other variants of the product seeing a 6% price drop. Nescafe packs over 45gms saw an 11% price reduction, while smaller packs had increased grammage. ITC has also announced to pass on the benefits to the consumers and is preparing a revised price list for its products.
Further, the ministry of consumer affairs has announced the revision of its earlier advisory of placing new price stickers on the unsold inventory manufactured before September 22nd, 2025. It has notified that manufacturers can voluntarily place the new stickers on the unsold inventory as long as the original price is clearly visible.
Additionally, the government has also notified to the manufacturers that, any unused wrapping and packing material with old MRP may be used until March 31, 2026 or till stocks last whichever is earlier provided the price corrections are made using stamps and stickers.

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The price cuts augur well for the sector which through the price revisions will witness incremental volume growth. The growth had been subdued earlier due to demand issues which is likely to bottom out in H1FY26 and start recovering from H2FY26. Better rural demand coupled with the recent price revisions will help the margins of the FMCG companies to gradually improve.
The notification is positive for the companies selling small pack units such as Rs.5 and Rs.10 packs who now do not have to write-off the older inventory and the usage of older packaging material will also help the FMCG companies save on any additional packaging cost.

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