Top biscuit manufacturers seek GST cut for below Rs 100 per kg segment

Manufacturers say 18 per cent rate too high, 5 per cent reasonable
Top biscuit manufacturers in India are asking for a cut in goods and services tax (GST) on a part of the biscuit portfolio and not the entire category, a top official has told Business Standard. The statement acquires significance in the wake of the GST Council meet, slated for Friday, which is likely to take up the matter.

Mayank Shah, category head of Parle Products, said biscuit makers under the aegis of the Biscuit Manufacturers Welfare Association had petitioned the government for a GST cut on the below Rs 100 per kg biscuit segment. This category had been slapped with 18 per cent GST, bringing it on par with the above Rs 100 per kg segment, which also attracts the same rate.

“We are asking that the GST be rationalised to 5 per cent on the below Rs 100 per kg biscuit segment,” Shah said. Biscuits in this category are priced at Rs 5 and below. And consumers here are typically price conscious. “There is a need to keep the profile of consumers in mind when clubbing a category under a GST tax bracket. 18 per cent is too high for this segment. 5 per cent is reasonable,” he said.

The below Rs 100 per kg biscuit segment constitutes 25 per cent of the Rs 37,000-crore biscuit market, experts said. Parle Products is the biggest player in this category with Parle-G, said experts, though most other biscuit manufacturers, too, have brands priced at Rs 5 to partake of entry-level consumers.

Volume-wise, Rs 5 packs constitute over two-thirds of the biscuit market, given that it is both convenient and affordable. 

However, in April-June 2019, the growth rate of the overall biscuit market fell to 2 per cent from 7 per cent earlier, led by a sharp decline in the growth rate of biscuits priced below Rs 100 per kg, sector experts said. Shah said this was due to the 18 per cent GST rate, which had forced biscuit makers to hike prices in recent months. 

“Prior to the GST regime, there was no excise duty on this segment. This was in keeping with the profile of the consumer in that category,” he said. 

“All we are saying is that GST should be at 5 per cent, rather than 18 per cent in this segment. Bread, also consumed by the mass market, is at zero per cent GST, while rusk is at 5 per cent,” he said.

In an investor call last month, Britannia’s Managing Director Varun Berry had also pointed to the general economic slowdown for people cutting back on biscuit consumption.

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