The goods and services tax (GST), the biggest tax reform since Independence, is likely to lead to much disruption in trade as transition fears grow in the run-up to its introduction on July 1.
Retail and wholesale trade Business Standard spoke to (across fast-moving consumer goods, durables and pharmaceuticals) admit they remain unclear about transition gains and losses, prompting them to scale back on inventory requirements by 50-70 per cent from current levels.
“I am speaking to manufacturers on a daily basis to understand what is the tax I land up paying and what is the reimbursement or input credit I get against it,” said Nilesh Gupta, managing director, Vijay Sales, a Mumbai-based electronics chain that has operations in the west and north of India. “If clarity doesn’t come I will be forced to cut down on inventory requirements for some time at least,” he added.
Dealers and retailers of consumer goods and pharma stock inventory for 30-45 days so that there is no disruption in sales. A thinning down of the inventory pipeline will mean that dealers will carry stock for 10-15 days only, which is a situation most companies would like to avoid. This is likely to kick in by the second or third week of June if the matter is not cleared quickly, people in the know told Business Standard.
“We may see some inventory correction happening in the latter half of June. Instead of lifting stocks for 40-45 days, we may see them taking stock for 10-15 days,” said Ameesh Masurekar, director of AIOCD-AWACS, the market research wing of the All India Organisation of Chemists and Druggists.
via Dealers to halve stocks as GST roll-out nears | Business Standard News
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