Chips and Processed Snacks May See Pack Size Increase Instead of Price Cuts

The Goods and Services Tax (GST) Council has reduced the tax on packaged chips, namkeen, and other processed foods like Kurkure from 12% to 5%. While this move is expected to provide relief to consumers, experts suggest that companies may prefer increasing the product weight instead of cutting prices.

 

Companies’ Likely Strategy

Industry analysts say food companies often avoid direct price reductions and instead adjust pack sizes. For example, a Kurkure packet earlier priced at ₹10 with 12% GST would now cost about ₹9.30 after the tax cut. Instead of reducing the retail price, companies may increase the quantity offered in the same pack to ensure customers feel the benefit.

 

Expert Concerns

Economists argue that the government’s intention behind the GST reduction is to pass on savings directly to buyers, but in practice, companies frequently alter pack weights rather than prices. This practice, while still beneficial in terms of quantity, prevents consumers from seeing immediate financial relief at the counter.

 

Government’s Stand

Authorities have made it clear that while increasing weight is acceptable, keeping prices unchanged without providing proportional benefit to consumers could invite scrutiny. The consumer affairs department has also stressed that the tax cut should ideally translate into lower prices or visibly greater value.

 

Outlook

For customers, the change means either slightly larger snack packets at the same price or lower prices where companies choose to pass on the tax benefit directly. The real impact will depend on how manufacturers decide to implement the GST reduction in the coming months.