Distributors flag GST hurdles, seek FM’s intervention to protect businesses and consumers
The Federation of All India Distributors Associations (FAIDA) has raised concerns over complications arising from the recent GST rate reductions, cautioning that without clear guidelines, both consumers and small traders could be left at a disadvantage.
In a letter addressed to Finance Minister Nirmala Sitharaman on September 8, a copy of which was accessed by CNBC-TV18, the body outlined the financial and operational challenges its members face.
FAIDA, which represents nearly five lakh distributors across FMCG, mobiles, telecom, and food & beverages and serves over two crore retailers nationwide, highlighted that a significant portion of unsold inventory remains stuck at old tax rates.
“A large portion of the current stock is already lying with company distributors or super stockists. Even though tax rates have been reduced, manufacturers may not revise the printed MRP on these goods,” the association said in its letter.
The distributors warned that the relief may not translate into consumer benefit in the short term. “Even if retailers receive goods at a reduced price from distributors, there is no guarantee that this benefit will be passed on to consumers—particularly since the market is already carrying four to six months’ worth of old stock at the earlier prices,” the letter noted.
Adding to the uncertainty, the body pointed out the risk of companies resorting to temporary marketing tactics.
“Distributors claim that even if they reduce prices in line with the tax reduction but the old MRP remains printed, the passing on of benefits becomes doubtful from a legal standpoint. Companies may release temporary schemes such as ‘10% extra product’ or ‘20% extra’ while continuing to sell at the old MRP. After a short time, these schemes may be withdrawn, and the old MRP-based sales will resume. In such cases, the consumer gains nothing from the GST reduction,” the letter said.
