Common man, who expected prices of consumer goods to fall as a result of the government's stimulus package, will be disappointed as FMCG firms ruled out any such step stating the "half measure" was not enough.
"Input costs have risen by 20-30 per cent and as such the reduction of excise rate is too less to totally offset the high input cost escalation. I do not think the FMCG sector would be able to pass on much benefit to the common consumer," Rasna Chairman and MD Piruz Khambatta told PTI.
Reacting to the government's overall stimulus package and the cut in Cenvat by four per cent in particular, announced yesterday, he said it was just a "half measure".
Ruling out possibility of price cuts in the FMCG sector, Emami Director Aditya Agarwal said: "Most of our facilities are already located in excise free zones and as such there would not be impact from the rate cut."
He, however, added that the company would "definitely work out what, if anything" to reduce its product prices.
Leading FMCG company Dabur India said the company's manufacturing plants are based in excise-free zones and so the "excise cut would not have any direct impact on us".
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"However, there would be some savings on excise paid on raw materials, which coupled with the Cenvat reduction will result in overall cost efficiencies and savings...," Dabur India Executive Director Rajan Verma said.
Procter & Gamble termed the excise duty reduction as a welcome development but the company remained non-committal on follow-up action.
"It is a welcome measure for the economy," the company said in a statement. It, however, did not spell out if it would be passing the benefit to consumers saying "we will share our plans as they develop".