Winning Bizness Desk
Mumbai.After the implementation of the revised GST, everyday products have become slightly cheaper, but the new prices have left both customers and shopkeepers puzzled. Items that earlier had rounded rates are now available at unusual figures, making it difficult to pay or receive change. For instance, a Classic large cigarette that cost Rs 19 earlier is now priced at Rs 21.77. Similarly, a Parle-G biscuit packet that was sold at Rs 5 is now available at Rs 4.45. A shampoo pouch that was earlier Rs 2 is now Rs 1.77, while a toffee that cost Re 1 is now only 88 paise. With 50 paisa coins already discontinued and digital payment not convenient for everyone, both sellers and buyers are struggling to settle the bills.
Bigger packs seen as practical solution
Manufacturers say they are passing on the benefit of reduced GST rates to consumers but admit that handling such broken prices is proving complicated. Mayank Shah, Vice President of Parle, explained that though the situation may cause trouble for now, the expectation is that customers will either make digital payments through UPI or switch to larger packs to avoid the loose change issue. He pointed out that companies fear raising product weight instead of lowering prices, as the government may object and accuse them of not giving full benefit to consumers. Businesses are seeking clarity from the government on what would be considered a correct method of passing on the tax cut.
Other companies revise their prices
Mondelez, the company behind chocolates and drink powders, has also slashed prices after GST adjustments. Its well-known health drink Bournvita has been reduced from Rs 30 to Rs 26.69. Oreo biscuits earlier sold for Rs 10 now cost Rs 8.90, while 5 Star chocolates priced at Rs 20 are now Rs 17.80. RSPL Group, which makes soaps and detergents, has also cut prices of its old stock by up to 13 percent. According to the company’s President, Sushil Kumar Bajpai, this was done to make it very clear that the reduction in tax is being passed directly to the customers.
Small packs dominate Indian market sales
The pricing complication has struck particularly hard in India, where small packs dominate consumer demand. Industry figures show that 79 percent of shampoo sales come from Rs 1 and Rs 2 pouches. In biscuits, 64 percent of the sales are of Rs 1, Rs 2 and Rs 5 packs, while chocolates see 58 percent of sales from the same small denominations. Products which for years were sold in rounded prices are now available in odd numbers, making it difficult for shopkeepers to give change and for customers to calculate payments. Both sides are often left wondering how to settle the difference.
Temporary issue likely to be resolved soon
Industry insiders believe the problem of odd pricing will not last for long. As soon as market conditions stabilise, companies may return to the familiar Rs 5 and Rs 10 rates. The difference will be that consumers will get slightly more product quantity in the pack instead of seeing lower prices. This adjustment would make payments simple again while still ensuring that the benefit of GST reduction reaches the public.
Government clarification sought by companies
When GST was first rolled out in 2017, several companies faced penalties for not reducing prices even after a cut in tax. This time, businesses do not want to repeat that mistake. They are therefore asking the government for clarity on whether increasing product weight instead of reducing prices would be acceptable. Companies want to be sure that their action is in line with regulations and that they are not penalised later for non-compliance.
Industry leaders optimistic despite current confusion
Prashant Peres, Managing Director of Kellanova India, acknowledged that confusion exists in the market due to unusual product prices. However, he expressed confidence that the situation will smooth out gradually. He admitted that there is restlessness at present among buyers and sellers, but reassured that the problem is temporary and will not persist for long. Businesses expect that customers too will adjust either by opting for bigger packs or using digital payments as a solution.
Summary pointers
1. GST revision has caused odd product prices like Rs 21.77 for cigarettes and Rs 1.77 for shampoo.
2. Customers and shopkeepers are struggling due to the lack of small coins and exact change.
3. Companies such as Parle suggest digital payments or larger packs to avoid payment issues.
4. Mondelez reduced prices of Bournvita, Oreo and 5 Star chocolates after GST cut.
5. RSPL cut old stock prices by up to 13 percent to pass benefits to consumers.
6. Small packs form the majority of sales in India, making odd prices a big challenge.
7. Companies seek government clarification on whether increasing product weight is acceptable.
