Ahead of the implementation of GST 2.0, players saw short-term disruption in sales during Q2 as traders focused on liquidating old priced stocks while cutting back on loading new stocks.
Leading FMCG companies said that GST transition-related impact across the supply chain continued through October. Some players expect the trading conditions to stabilise in November-December period with new pack pricing getting more streamlined.
Ahead of the implementation of GST 2.0, players saw short-term disruption in sales during Q2 as traders focused on liquidating old priced stocks while cutting back on loading new stocks. Meanwhile, consumers also postponed pantry loading in anticipation of benefits due to lower prices. With the new GST regime coming into effect on September 22, FMCG companies pushed product packs with new MRPs as well as increased grammage on products, in accordance with lower tax slabs. However, they pointed out that packs with both new and old MRPs will be seen in the pipeline during the transition.
GST impact
On the earnings call for Q2 FY26, CEO of Dabur India said that the GST impact was estimated at ₹100 crore which was 3-4 per cent of revenue. “The impact (of GST transition) was not restricted to only September and has carried forward into the October month also. I will not say that all the inventory of the old price stock has been flushed out in the system because there’s a huge inventory. There will be around 30-day inventory sitting at the retail and 20 days with wholesalers and distributors. So all that is still getting flushed out. Once old price inventories get flushed out then we can say that things have kind of streamlined. Still a little bit of issues are there as far as the old prices are concerned with the trade and the intermediaries.”
The management of Hindustan Unilever also told investors last month that the GST-related transition impact continued through October. “We anticipate normal trading conditions starting early November, once prices stabilise, paving the way for a gradual and sustained market recovery. While the increase in disposable income is a positive structural driver, we expect its benefits to manifest gradually in the demand trajectory, rather than through an immediate acceleration,” the company stated.
In the Q2FY26 earnings statement, an industry expert said, “The recent GST rate reduction is a welcome structural reform that will strengthen long-term consumer demand. However, this transition led to short-term trade disruptions as the channel adjusted to new pricing and cleared old inventory, particularly impacting soaps and hair colour.”
