India's new goods and services tax (GST) regime is proving to be a mixed bag for foreign companies operating in India.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

While some overseas companies are telling their investors how GST has impacted earnings, others are already beginning to see the positive effects of the new tax system in one of their biggest markets when it comes to growth.

Global direct-to-consumer company Tupperware Brands has told stakeholders that GST in India affected Asia Pacific where Q3 segment sales fell 2% despite good show by China. Earnings fell. "Emerging markets in Asia Pacific were down 2% (even in local currency). Sales in China were up 33%. This was offset by decreases in India, down 30% (32% local currency), reflecting challenges in reaching a sales-force size advantage under the government direct selling guidelines, along with a negative 6% impact from a new goods and services tax effective in July," observed Tupperware Brands, headquartered in the US.

For the UK-headquartered GlaxoSmithKline plc, the AER (growth at actual exchange rates) during nine-month period ended September 2017 for consumer healthcare sales was up 10%, reflecting strong performances from power brands in the pain and oral health categories but was partly offset by a continuing backdrop of slower global growth in key categories. "In addition, reported growth was impacted by the Nigerian beverages business divestment and the goods and service tax implementation in India on 1 July," pointed out the British company.

However, some global giants are seeing an uptick on account of GST, which aims to unify the India into one single market.

Unilever N.V., the Dutch-British transnational consumer goods company with over 400 brands, has said that while conditions in its developed markets remain challenging, it is starting to see signs of improvement in some of biggest emerging markets including India. "In India, volume growth improved after the goods and services tax implementation, and as expected, price growth lowered as the benefits of the tax change were passed on to consumers," said Unilever.

Similarly, multinational healthcare company Abbott said post-GST, purchasing trends have improved. "As expected, sales in India were positively impacted by purchasing patterns following the implementation of a new goods and services tax system that lowered second-quarter sales in that country," said Abbott about its Q3 show.

TALE OF TWO COS

  • Tupperware Brands has told stakeholders that GST in India affected Asia Pacific where Q3 segment sales fell 2% despite good show by China  
  • However, Unilever said volume growth improved after GST implementation and price growth lowered as the benefits of the tax change were passed on to consumers  
  • Multinational healthcare company Abbott said post-GST, purchasing trends have improved