Local soft drink companies hit by GST hike
The enthusiasm to add fruit juice to carbonated drinks has come back to haunt regional drinks makers, as these products are currently subject to a GST of 28% with an additional 12% of compensation cess. They were earlier paying 12%.
While some local companies have hike hiked MRP by Rs 2, most others are looking at ways to exit the crowded market where Rs 10 is the average MRP. “Almost all local players had stopped manufacturing carbonated soft drinks after they realised that adding fruit to the drinks attracted lower taxes,” said the owner of one of the largest regional beverage makers. “A large percentage of them, however, was adding less than the required amount to earn a quick buck.”
While adding fruit juice to carbonated drinks costs around 5% more for a manufacturer.
