Centre's mega GST move triggers 'unsold inventory' conundrum for FMCG firms
&imwidth=600&imheight=450&format=webp&quality=medium "Centre's mega GST move triggers 'unsold inventory' conundrum for FMCG firms")
The central government on Wednesday discontinued the 12 per cent and 28 per cent slabs. Photograph: (ANI file)
Goods and Services Tax reforms 2025: Companies have urged the ministries of finance and consumer affairs to provide at least a window of 30 days for the implementation of the GST reform.
In the wake of the centre's announcement on GST rationalisation, the consumer goods companies are seeking an extension of the September 22 commencement date for their revamped structure, citing logistical problems as to the management of existing stocks.
They have also sought clarification from the government on whether they can pass on the GST benefits to customers by increasing the size of their products.
Companieshave urged the ministries of finance and consumer affairs to provideat least a window of 30 days before the implementation of the GST reform. They argued that they need time to clear their inventories and packaging materials.
The companies said that the packaging material with old details had been printed. They also have inventories of already packaged items.
"The challenge will be to manage existing stocks and packaging materials already printed, which are in the pipeline," Mayank Shah, vice president at India's biggest food company, Parle Products, told Economic Times.
He said the firms have sought clarity on how price cuts canbe passed to the customers.
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Distributors have also sought clarity as to how FCCG companies are planning to handle inventory before the new GST slabs take effect.
The firms said that products are already in warehouses and on shelves with prices rated under the current GST structure.
They said that if the GST is rolled out as planned, it could create dual inventory problems for them. They said most companies had increased their inventories due to the upcoming festive season.
A senior executive at a large multinational home and personal care firm told the newspaperthat they should be allowed to retain the prices of popular packs with increased weight or use the same packaging materials. They said they could pass on the benefits through discounts.
The central government on Wednesday discontinued the 12 per cent and 28 per centslabs. It placed the items in these two slabs to 5 per cent and 18 per cent slabs, and created an additional slab of 40 per cent for sin goods.