Impact Of GST On Fast Moving Consumer Goods Sector in India

Abstract

The fast-moving consumer goods are our important contributors to both direct and indirect tax. When we investigate the GDP contribution, FMCG is an important player. Goods and Service Tax which subsumed most of the indirect taxes in the country would have a significant impact on the fast-moving consumer goods sector. This research paper being quantitative research uses data relating to ten FMCG companies to analyze the impact of GST on the companies in the FMCG sector. The main objective of the paper is to know how GST has impacted the companies in the FMCG sector. During analysis, we got to know that it aims at simpler tax regime and transparency in all transaction. It seems that it is beneficial to these companies.

The fast-moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy. The market size of FMCG in India is estimated to grow from US$ 30 billion in 2011 to US$ 74 billion in 2018. Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. The sector is likely to see a significant impact once the Goods and Services Tax (GST) Bill is passed as the companies set up warehouses across the states in a bid to have a more tax efficient system. Even from the fast-moving consumer goods (FMCG) industry, the sheer efficiency of goods and services tax (GST), if the design is such that the credits do not stick to the business and are passed on in the value chain, there will be benefits even from an efficiency perspective for a FMCG industry. The second fact is the fact that FMCG industry today has a network design which is also entirely driven by the concept of stock transfers and then sale through depots. As GST is replacing various indirect taxes used to be levied by central and state government, it has an impact on all most all the sectors of Indian economy. FMCG is one such sector directly having its impact on large public. It is very important to study the possible positive and negative impact of GST implementation on FMCG sector. Hence, the study covers possible impact of GST in FMCG sector. It also explains the perspective positives and negatives of GST implementation to FMCG sector. The study further covers the effectiveness of GST in FMCG sector in the countries already implemented it.