From QSR firms to grocery retailers and apparel and footwear companies, the new GST rates are expected to boost consumption. Bernstein in a recent report on the GST impact on Indian economy, listed out 5 key sectors that are set to see maximum impact.
FMCG firms to gain immediate pricing support: Bernstein
Bernstein highlighted that the biggest surprise in the GST rate revamp. The move to slash rates on personal care and home care products—such as soaps, shampoos, hair oil, powders, and toothpaste—to 5 per cent from 18 per cent or 12 per cent is expected to boost buying.
“This should provide pricing support in the immediate term to FMCG firms, allowing them to keep more part of the gross price that consumers are charged,” the report stated. It further added, “In the medium term it can drive demand via higher grammage in the products or via indirect higher wallet share with consumers.”
Quick commerce platforms set to benefit: Bernstein
According to Bernstein, grocery retailers like DMart, Vishal Mega Mart, and Star (part of Trent), along with quick commerce platforms, are “set to benefit the most, as the immediate increase in cart size can be leveraged to push more items or higher-margin premium products,” thereby boosting bill value and margin profiles.
Apparel and Footwear See Mixed Impact: Bernstein
Bernstein highlighted that GST restructuring on apparel and footwear “will see mixed impact” as GST for apparel priced between Rs 1,000- 2,500 will now attract 5 per cent GST, down from 12 per cent. However, items above Rs 2,500 will be taxed at 18 per cent, higher than the earlier 12 per cent.
For footwear, the shift is sharper. Products priced below Rs 1,000 and those in the Rs 1,000–2,500 range will now face just 5 per cent GST. Footwear above Rs 2,500 remains at 18 per cent.
“We think this is marginally positive for Trent as approx 30 per cent of their revenues are above Rs 1,000 average selling price (ASP),” the report highlighted.
Trent, Aditya Birla Fashion Retail, and Aditya Birla Lifestyle Brands are also expected to “benefit as a larger share of their products,” are above Rs 1,000 as per the Bernstein study.
“Footwear GST rationalization would impact retailers like Liberty, Campus, Metro etc” the report added.
Neutral impact on value apparel retailers: Bernstein
Bernstein report noted that the impact on value apparel retailers like Vishal Mega Mart, V-Mart, V2 Retail, and Style Baazar would be largely neutral as a majority of their items are priced below Rs 1,000.
Bernstein expects margin gains for QSRs
According to Bernstein report, food delivery platforms in contrast, may face an additional burden due to the revised GST rates. An 18 per cent GST has now been imposed on delivery charges collected through e-commerce operators, which were earlier tax-free. Delivery accounts for 10–20 per cent of food delivery platforms’ revenue.
Bernstein estimates Jubilant FoodWorks, which runs Domino’s, could see its gross margins improve by 70–80 basis points. Other QSR chains may benefit by 20–40 basis points depending on their input mix. Cheese alone accounts for nearly 7.5 per cent of Domino’s revenue, while packaging makes up 3.2 per cent.
New GST charges on food delivery
Bernstein also highlighted that while retailers and QSRs cheer the reforms, food delivery platforms face an additional burden. A new GST of 18 per cent has been imposed on delivery charges collected through e-commerce operators, which were earlier tax-free. Delivery accounts for 10–20 per cent of food delivery platforms’ revenue.
Analysts believe this cost may either be absorbed by companies like Zomato and Swiggy or passed on partially to restaurant partners and customers. Other platform fees such as surge pricing and handling charges already attract 18 per cent GST.