Worried about the short term trade disruptions, the consumer goods companies are only awaiting a smooth GST implementation with a hope to avoid extreme negative sales impact during the Big Sale time.
With the festive quarter arriving earlier this year, that is in September, companies are planning to mitigate the impact by reducing inventory pipelines, even if it means facing the sales blow in June. The wholesale distribution channels that contribute to half of the revenue of FMCG companies is fretting about the impact as well. With huge consumer promotions, the businesses are expecting to offset losses from already weakening sales.
CM Singh, Chief Operating Officer, Videocon comments, “The most obvious way to mitigate poor sentiment is to opt for smaller hikes —instead of straightaway passing on the full price increase — to cushion demand ahead of the festive season.”
Compared to the current tax rate of 23 to 24%, the GST Council is proposing a 28% bracket on consumer electronics and durables like televisions, air conditioners and refrigerators. Other mass consumption products like soaps and hair oils are kept under the slab of 18% compared to the earlier slab of 22-24%.