Distributors, retailers reduce inventory as they seek clarity from FMCG makers

Distributors and retailers have reduced the Fast-Moving Consumer Goods (FMCG) inventories to between 5 and 6 days from the earlier 10-15 days to clear stocks, and with no clarity from FMCG makers on the timeline for implementation of GST 2.0. “With the recent GST rate changes, companies are aligned on passing the benefits to consumers and actively discussing avenues to be compliant with the law by engaging with legal experts. The law expects this to be done through price reductions; however, in reality, there are various challenges. For instance, product packaging/ labelling, very low-price points, and goods already in transit pose challenges to pass on the benefit by actual reduction in prices. Also, various commercial factors play an important role in the pricing of a product. Therefore, businesses often look at practical alternatives, such as increasing the quantity in small packs, extending ‘buy one, get one’ offers, or offering discounts,” said Manish Mishra, Partner and Head of Practice, Indirect Tax – JSA Advocates & Solicitors. Read more