Colgate, Britannia, Nestlé, and Emami to Reap Major Benefits, ETCFO
Consumer goods companies such as Colgate, Britannia, Nestlé, and Emami are set to benefit the most from the government’s GST rate rationalisation, which slashed rates on key staples from 12–18% to 5%. The cuts, effective from 22 September 2025 (except for cigarettes), are expected to boost consumption during the festive season and beyond.
Colgate leads the pack, with nearly 95% of its domestic portfolio covered under the revised tax slabs, translating into a ~12% effective GST rate reduction at the company level, according to Motilal Oswal Financial Services. Britannia, with 90% of domestic sales falling under the impacted categories, also stands to gain 12% in effective cuts. Emami, with 90% of its sales from the domestic market, is expected to see ~9% benefit, while Nestlé India, with 80% domestic sales exposure, could enjoy ~8% effective tax savings. Other FMCG players, including Dabur, GCPL, HUL, Marico, and Jyothy Labs, will also see benefits, though at a relatively lower scale.
The GST move
The GST Council’s move shifts the current four-tier system (5%, 12%, 18%, 28% + cess) to a simplified structure, with a standard 18% rate, a 5% merit rate, and a new 40% de-merit rate for categories like cigarettes and carbonated beverages. Essential personal care items such as hair oil, shampoo, soaps, and oral care, along with food products like biscuits, noodles, dairy items, instant coffee, chocolates, and fruit juices, now fall under the lower 5% slab.
Most companies are expected to pass on tax savings to consumers under the anti-profiteering clause, either by reducing prices or increasing grammage in price-point packs. The brokerage estimates an additional 200–300 basis points of volume growth across FMCG companies, especially those with a higher low-unit pack mix.
While the GST transition may cause near-term distribution disruptions as traders adjust inventories and companies recalibrate packaging and price points, the impact is expected to be temporary. Structural benefits, however, are seen as medium-term drivers for volume-led growth.
