ANI
06 Sep 2025, 14:33 GMT+10
New Delhi [India], September 6 (ANI): Global financial services firm Bernstein also echoed similar sentiments to those of several other experts that the sweeping GST rate cuts will boost India's consumption.
In a report, it has painted a particularly bullish picture for footwear, QSRs, FMCG, and grocery retailers.
The key surprise element, according to the Bernstein report, was the GST on personal care and home care items (soaps, shampoo, hair oil, powder, toothpaste) from 12%/18% to 5%.
'This should provide pricing support in the immediate term to FMCG firms, allowing them to keep more part of the gross price that consumers are charged. In the medium term, it can drive demand via higher grammage in the products or via indirect higher wallet share with consumers,' the Bernstein report read.
It expects grocery retailers like DMart, Vishal Mega Mart and Star (Part of Trent), along with quick commerce firms, to benefit more.
In the apparel and footwear segment, the GST for apparel products below Rs 1000 was 5% and above Rs 1000 was 12% while for footwear below Rs 1000 was 12% and above Rs 1000 was 18%.
Now, the GST for apparel and footwear products from Rs 1000 to Rs 2500 is also at 5% while apparel products priced above Rs 2500 have their GST increased to 18% from the existing 12% (footwear above Rs 2500 was already at 18%).
'We think this is marginally positive for Trent as 30% of their revenues are above Rs 1,000 average selling price (ASP). ABLBL (Aditya Birla Lifestyle Brands Ltd) and ABFRL (Aditya Birla Fashion and Retail) would also benefit as a larger share of their products are above Rs 1000.'
The impact on value apparel retailers like Vishal Mega Mart, Vmart, V2 Retail, and Style Baazar would be broadly neutral, as a majority of their items are priced below Rs 1000.
Footwear GST rationalisation, according to Bernstein, would impact retailers like Liberty, Campus, and Metro.
The key benefit for quick-service restaurant firms would be the reduction of GST on cheese, packaging materials, condiments (such as sauces), butter/ ghee/ margarine, among others.
'QSRs do not get input tax credit - hence all GST on their inputs are expenses. Any GST reduction impacts their gross margins immediately. In the medium term, they may choose to transfer some benefit to drive volumes as well. Within organised players, we expect Jubilant to benefit the most to the tune of 70-80bps improvement in gross margins,' it explained.
For the other QSR players, we expect the impact to be in the 20-40 basis points range.
The sweeping changes have been made under the next-generation GST (Goods and Services Tax) rationalisation on September 3, just days after Prime Minister Narendra Modi announced it from the ramparts of the Red Fort on Independence Day.
This is aimed at reducing the tax burden on citizens while stimulating economic growth.
The GST Council, on Wednesday, after a threadbare discussion, approved significant rate cuts across multiple sectors, which the government has described as a Diwali gift for the nation.
The GST rate rationalisation will come into effect on September 22. (ANI)
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