Car makers cut prices, iPhone too cheaper; ghee gets costlier

MUMBAI/NEW DELHI: As GST, the new tax regime that's meant to replace a tangle of central, state and local levies and turn the country into a single market, kicked in on Saturday, it proved to be a mixed bag for consumers.
The good news came from consumer goods companies such as Hindustan Unilever (HUL) and Amul which reduced prices on several products along with auto firms like Maruti, Toyota, and BMW.
The reduction in car prices ranges from around 2,300 for Maruti Alto to over Rs 5 lakh in case of luxury vehicles such as Jaguar XJ. But be prepared to shell out more for hybrid vehicles where the tax rate has been increased, while superbike brands such as Harley-Davidson and Triumph will set you back by another Rs 30,000-60,000.
While several companies, ranging from Procter and Gamble, Mahindra, Honda and LG, are still doing their pluses and minuses, others such as Samsung have gone ahead and raised prices of white goods in line with the change in tax rates. On the mobile phone front, Apple has slashed prices of iPhones by as much as Rs 5,600 on one model, while Samsung has chosen to wait and calculate, citing large variations in state VAT (value added tax) rates.

Among consumer goods makers, HUL was first off the block with price cuts for some products such as Rin bar, while increasing the weight for others like Dove bathing bar and Surf Excel bar.
Sources said that after a prod from the government, others are expected to follow in HUL’s footsteps, although many of them had earlier planned against any immediate price changes. “The fear that the anti-profiteering clause will be invoked has got them moving,” said a person working closely with some of the companies.
Other FMCG companies like Marico and Dabur, which planned a shutdown to migrate to the new taxation regime, will begin invoicing with their distributors in a few days. New prices are expected to be announced next week.
A number of manufacturers appear willing to aborb small cost increases. “In the soaps segment, where GST rates have come down, we intend to pass on the benefits to consumers through a price reduction and/or increased grammage. In categories where GST rates have gone up, we don't intend to increase prices,” said Godrej Consumer Products managing director Vivek Gambhir.
Piruz Khambatta, CMD, Rasna, said the company would absorb the 3% cost rise due to GST and not pass it on consumers.
R S Sodhi said GCMMF, of which he is MD, had increased prices on its Amul and Sagar ghee brands by 7%, following a GST of 12%, up from 5%. However, on dairy whiteners and cream, Amul reduced price by around 6%. The prices of these products had gone back to 2014 levels, said Sodhi. While he expects consumption growth in dairy whiteners, cream and paneer to go up, Sodhi feels ghee sales could be impacted because of the price rise. While the price of Amul Ghee has gone up by 7% to Rs 505 (1 litre refill pack) from Rs 470, Amulya 1 kg pouch price has come down from Rs 358 to Rs 335. Amul cream prices are down 4% (Amulspray 1 kg pouch - old price Rs 360, new price Rs 335; Amul Cream 1 litre - old price Rs 190, new price Rs 182).
Another player in baby foods and dairy whiteners, Nestle India, is yet to communicate price changes. A Nestle India spokesperson said the company would pass on the benefits to the consumers in categories where there is a tax reduction. "Appropriate price reductions will be put into effect for stocks manufactured from July. There will be a transition time before new price stocks are available in the market," said the spokesperson.