Dabur India CEO Mohit Malhotra said a potential Free Trade Agreement (FTA) along with GST reforms would provide a powerful boost to India’s consumption story, creating a ripple effect across demand, investments and employment.
“Forex is one aspect we are not able to put our finger on. But if the FTA concludes by the end of the year, it will be a big positive,” Malhotra said. “We expect demand to move up by 500–600 basis points, which will have a trickle-down effect on investments. Besides augmenting demand, there will be relocation of capacities also.”
GST reforms and their impact
Malhotra stressed that GST reforms have already benefited the Ayurvedic industry, where Dabur is the world’s largest player. “What we see optically is a rate reduction, but what we don’t see are the procedural simplifications. Earlier, a local Chyawanprash had 5% GST while a branded one had 12–13%. Now, all Ayurvedic medicines fall under 5%. This bridges the gap between unorganised and organised players, and gives a major boost to quality production in India,” he said during a panel discussion at Network 18's Reforms Reloaded event in Delhi.
He added that a broader GST cut could have a transformative effect on demand. “If you take price points in FMCG — say a Rs 1 product brought down to 93 paise — in absolute terms, for the Indian market, that’s Rs 2 lakh crore of impact. Demand will improve, which means investments will improve, which means employment will improve. The Indian economy will really benefit,” Malhotra explained.
According to Malhotra, affordability remains central to rural and urban consumption. “The Rs 5–10–15–20 price points contribute 40–50% of consumption. These magical price points cannot be breached. If they are, it would lead to commensurate grammage increases across the board,” he said.
He noted that rural demand, where nearly 60% of consumption comes from women shoppers, is highly sensitive to such thresholds. “A consumer often doesn’t ask for a brand, but asks for a product at a particular price point. That’s why these points are magical, and they cannot be breached,” he said.
Malhotra said India’s middle-class consumer base, estimated at around 50 crore today, is projected to grow to 70 crore by 2030. “For a Rs 25,000-per-month household, the GST and tax reforms translate into savings of Rs 800–1,000 monthly, or Rs 17,000–20,000 annually. For a household earning Rs 5 lakh a year, this is substantial and will translate into higher consumption,” he said.
With affordability-led demand, supportive policy reforms, and the structural expansion of the middle class, Malhotra said Dabur remains optimistic about India’s FMCG growth trajectory. “India reigns with these magical price points. They are central to the country’s consumption story,” he added.
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