July 2, 2018
The imposition of 5 per cent tax on branded basmati is costing the industry dearly with the sales going down by as much as 20-25 per cent. Actually the Indian branded basmati rice industry in the country has paid a heavy price after the GST roll-out, with some players claiming that the new tax regime knocked nearly 20 per cent off their sales volume.
But as of now the Basmati Rice Industry is losing out to those who are selling non-branded basmati as customers are very price-sensitive and even small increase in the price is turning them away from buying branded products.
However, the dip in sales was only marginal, particularly in the premium product segment, as these consumers are more quality-conscious and thus do not mind paying a few extra bucks. Industry sources, on other hand, flagged another serious issue that emerged since the GST implementation. After the government decided to reduce the GST on restaurants to 5 per cent, from the initial 12 per cent, and denied them input credit, the eateries have begun buying rice, pulses and other food-grade commodities in non-branded bags from registered companies, helping them save margins.