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Tricky situation ahead for FMCG companies on passing GST benefits for small packs

ICICIdirect Research 12 Sep 2025 DISCLAIMER

Small packs of Rs5/10 packs contribute around 40-45% of the overall volumes of the FMCG companies. These packs are of high importance for FMCG companies as they have high traction in the rural market. Also act as a trial pack for FMCG companies for some of the new product launches.
FMCG companies have geared for passing the GST benefits to the customers in the form of price cut or grammage increase in key pack sizes. For large packs passing on the benefit will be relatively easier through price cut by using stickers will lower prices.
However, passing on the benefit on the small packs will be a tricky task as the companies won’t be able to increase the grammage of small packs or do a small price cut (for e.g. reducing the price of small pack of Rs4.7 from Rs5 earlier) for the existing inventory in the system. Not passing on price cuts would imply non compliance
In such a scenario, the government has to provide an extension of period to sell the existing inventory of Rs5/10 with no change in grammage or the companies have to inventory write-off on the books for unsold stock.
We expect the FMCG industry to request the government to provide an extension of 45-60 days to reduce inventory of small packs.

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