Dabur India CEO Mohit Malhotra is optimistic about the impact of the Goods and Services Tax (GST) reforms on consumption in India. He believes that the rate cuts will provide a strong boost to consumption, particularly for middle-class households. Malhotra estimates that the reforms will result in a 300 basis points increase in overall consumption, with urban demand catching up with rural demand. He also expects a 500-600 basis points boost in demand from the shift to “magic price points” such as ₹1, ₹5, ₹10, ₹15, and ₹20 packs, which account for nearly 25-30% of FMCG consumption.
Malhotra explains that households with a monthly expenditure of around ₹25,000 could see an annual savings impact of ₹1,000-₹2,500, directly translating into additional disposable income. This, he says, can restart discretionary spending. He also highlights the structural shift the reforms could drive in favor of organized players, as GST reforms will help shift consumers from unorganized to branded products. For example, in categories like toothpaste and ayurvedic medicines, these reforms will enable Indian players like Dabur to compete more fairly with global MNCs.
However, Malhotra cautions that the withdrawal of area-based GST benefits may pose challenges, and the company may have to relook at relocating capacities since local incentives will no longer be available. Despite this, he is confident that the reforms will help Indian brands like Dabur compete on equal footing globally. As the world’s largest ayurvedic player, Dabur is focused on doing things the “swadeshi way”, and Malhotra believes that the reforms will support this vision.
Overall, Malhotra is bullish about the impact of the GST reforms on consumption and the Indian economy. He expects the reforms to provide a strong consumption boost, particularly for middle-class households, and to drive a structural shift in favor of organized players. With the reforms, Malhotra believes that Indian brands like Dabur will be able to compete more effectively with global MNCs, and that the company’s focus on ayurvedic products will continue to drive growth and profitability.