Our Bureau
New Delhi
The new Goods and Services Tax (GST) reforms that will kick in from tomorrow and as per the new tabs they are going to reduce the tax rates and provide relief to the Indian dairy industry. The CEO of the well known dairy brand in South India Heritage Foods, Srideep N Kesavan has stated the price reduction will provide an opportunity to the organised market players to make their way in the market of the unorganised players.
Kesavan spoke that with the central government’s move to introduce the new GST 2.0 there cannot be a better time for FMCG dairy to grow. The impact of the comparatively lower tax rates on a number of dairy products that earlier will be huge as dairy products have a higher frequency of purchases compared to many other products.
N Kesavan said, “Our investors and the business will be an expansion in business because we are going to eat into the informal or unorganised sector. For the government, it will mean expansion of the GST base.”
In the dairy sector, Ghee, butter, cheese and ice-creams are categories that contribute about ₹65,000 crore in revenue for the organised players. Ghee alone accounts for about ₹32,000 crore for the organised players while generating the rest of ₹1,20,000 crore with the unorganised players.
He highlighted the potential for growth in the formal sector now with reduced tax rates as they can boost the supplies to the traditional sweet makers or hotels most of whom take their supplies from the informal sector. With reduced prices it is also expected that the consumption of the existing customers of the organised players will increase.
