GST reforms to bring fundamental shift for industry, create companies of scale: TCPL MD & CEO

New Delhi, Sep 25 (PTI) GST 2.0, which lowers food prices, will accelerate urban demand, drive up consumption, and help the industry and GDP grow, bringing a fundamental shift in the economy, Tata Consumer Products Ltd (TCPL) Managing Director & CEO Sunil D'Souza said on Thursday.

Terming it as a 'game changer', D'Souza said this will also encourage a shift from unbranded to branded food products, as the difference is only 5 per cent in some of those commodities now. This will also promote upgradation or consumers entering into new categories as it will leave extra money in the hands of the consumers.

This will drive up domestic consumption, which also means encouraging industries to scale and thereby become players on the world market, D'Souza told PTI on the sidelines of World Food India.

"I am saying it beyond festive this thing. It is a structural change in the economy, and I think this will drive up domestic consumption and therefore, GDP growth," said D'Souza, adding, "I think there have been multiple levers put in place to drive domestic consumption and will create companies of scale.

When asked about urban consumption, D'Souza said he is in the "opposite camp" against people who say demand has softened.

"Urban demand is not slowing. I see demand already there. It will accelerate from here," he said, adding, "I think when people talk about urban consumption softening, you have to remember there are channels which are shifting also.

Channels as Quick-commerce did not exist a year back or two years back and now it contributes to 10 per cent of the top line of the Tata group FMCG arm.

"So, if you are not on e-commerce, you will see our numbers softening. E-commerce overall, quick commerce and e-commerce is about 16 to 17 per cent of my business, which did not exist couple of years back. If you do not count that, then 16 per cent of sales gone. So, I do think urban has been growing, albeit might be slightly slower than rural," he said.

When asked as TCPL is seeing any initial growth or uptick in sales, D'Souza said its too early to say.

"There are hiccups. While the quick commerce guys got on very quickly, some of the modern retailers, are getting their systems in order and therefore, purchase orders have become an issue. And also some of them had slowed down their purchases getting into this transitionary period," he said.

Over the magic price points, D'Souza said the industry is having some issues with sachets and will come back to the previous MRP.

"In sachet, you cannot up the grammage, unless you redesign the sachet or if it is a PET bottle, you need to change the mould, which will take time. So, as interim what we have done is, we have dropped the MRP, now in all fairness not all of that might get passed on, but from a company perspective, we have already dropped the MRP and therefore the price to the retailer in line with the GST guidelines," he said.

According to D'Souza, over a period of time, "we will figure out how to give more grammage back in the same packs, but on everything else, the regular consumer packs, there was no issue, we just (3:02) dropped the MRP straight away and moved on". PTI KRH LUX KRH MR