FMCG distributors body All India Consumer Products Distributors Federation (AICPDF), representing 45 lakh distributors and 13 million kirana stores in the country, on Tuesday appealed to the government to reconsider the proposed GST rate hike to 35 per cent on aerated beverages.
Seeking a lower GST rate on aerated beverages to align them with other foods and beverages categories, the association said increasing the rate is likely to hurt distributors, retailers, and consumers, particularly in rural and semi-urban areas.
“Aerated beverages, while categorized as luxury products, serve as affordable refreshment options for lower-income groups and rural populations. Any tax increase will not only impact their consumption but also jeopardize the earnings of distributors and retailers across the country,” the association said in a statement.
The Group of Ministers (GoM) earlier this month on GST rate rationalisation had decided to increase the rate on products such as aerated beverages, cigarettes, tobacco and related products to 35 per cent from the current 28 per cent, PTI had reported. The GST Council is expected to discuss the hike in its meeting on December 21.
AICPDF said the beverage sector holds significant growth potential, particularly in the general trade and small trader segments, which account for 80 per cent of the market. “Rationalizing the tax rate can unlock this growth, benefiting distributors, retailers, and the economy.”
Moreover, since aerated beverages are already taxed higher than many other food and beverage categories, despite being a mass consumption product, higher tax rates would create an uneven playing field and restrict the growth potential of this category, the associated stated.
AICPDF’s appeal comes amid growing competition in the quick commerce space which is allegedly hurting kirana stories in the country. According to the association, around 2 lakh Kirana stores have shut down in the last year because of the rapid growth of quick commerce along with the economic slowdown.
Source: The Financial Express
