Changes	GST Bracket	Products
Shift Down	From 5% ? NIL	UHT milk; pre-packaged & labelled Chhena/Paneer; Indian breads (chapati/roti, paratha, parotta, etc.
	From 12%/18% ? 5%	Packaged namkeens/bhujia, sauces, pasta, instant noodles, chocolates, coffee, preserved meat, cornflakes, butter, ghee and other everyday FMCG foods—designed to spur consumption
Remains Same	40%	“Sin”/luxury buckets (e.g., tobacco and allied products; some high-end items) do not receive rate relief. Luxury segment sees a separate 40% band retained/introduced for a narrow set of goods

Changes in Architecture Expected to Spur Consumption 
Broad-based price relief - Higher volumes in everyday foods: GST 2.0 compresses slabs to 5% and 18%, with a nil list for key essentials; many packaged foods move down to 5% (e.g., namkeens/bhujiya, sauces, pasta, instant noodles, chocolates, coffee, cereals/flake items, butter/ghee), and some dairy/bakery items (e.g., UHT milk; pre-pack chhena/paneer; Indian breads) are listed nil. This lowers shelf prices as stocks rotate, improving affordability across urban and rural baskets. 

Macro tailwind - Measurable CPI easing: Economists and market trackers estimate 20–30 bps downside to headline CPI from pass-through of rate cuts; Business Standard pegs the effect near 25 bps, while Reuters highlights a larger “up to 1.1 ppt” range cited by some analysts. Lower inflation supports real disposable income and typically lifts food category throughput. 

Formalisation nudge - Packaged vs. loose gap narrows: Because many prepackaged foods are now cheaper (5% or nil), the prior tax-driven price gap vs loose/un-labelled will get narrow driving a gradual shift to packaged products in staples, dairy and bakery. 
 
Impact on Consumer Brands, Food Manufacturers and Processors 
With many common foods moving down in rate (some to nil), households should see lower effective MRPs once stocks rotate. It is estimated that the rate rejig could support greater consumption ahead of the festive season leading to a demand impulse as sentiment strengthens. The move is expected to have a major impact on Food Manufacturers and Processors as they would have to navigate through quick decisions to maximise benefits:

Category Specific Shifts: Dairy basket - UHT milk/paneer relief supports pan-India availability and affordability and increased uptake; Juices and Processed Food segment with a cut to 5% can unlock greater demand in value tier packs, and single serves in rural and semi urban markets. In case of bakery/bread segments, Nil rate on chapatti / pao / parotta etc. would help QSR segment and street food sales. 

Packaged vs Loose Products: The 2022 “pre-packaged & labelled” regime remains— but lower rates on packaged SKUs reduce the price gap versus loose and will pull consumers toward formal, packaged formats especially in cereals / pulses / flour and dairy category.
 
Volume vs Margin Conundrum: With demand-elastic categories (snacks, noodles, sauces, value-added dairy) getting cheaper, rapid pass-through will allow brands to gain market share. An alternative strategy can be to absorb gains without passing the benefits to consumers to achieve higher margins. 

Product Promotion and Promotion Design: Expect brands to front load promotions in categories with proven elasticity (noodles, biscuits, sauces, juices, value-added dairy) to have quick gains. 

Demand Sensing and S&OP: With increasing demand for price elastic products and SKUs, brands would have to rapidly alter their demand forecasting and S&OP to ensure products are supplied at the right time and in full to the retail shelves. 

Channel Strategies: The move will lead to brands re-drawing their channel strategies to cement gains – an incentive push with price reduction in General Trade coupled with promotions in Modern Trade and sponsored search results in Quick Commerce can lead to brands taking early lead in price reduction led demand surge. 

Private Label & Competition: Expect retailer private labels to react fast on passthrough coupled with better placements on aisles to push for more sales. 
 
GST 2.0 marks more than a rate cut; it provides a reset demand distress facing India’s food and agri value chain. With a simpler two-slab architecture, and lower rates on essentials, the policy can translate into real price relief, and stronger consumption—if manufacturers pass benefits through quickly. The winners will re-ladder prices and packs, guard margins, and capture digital and modern-trade visibility in the first 30–60 days. The mandate is clear: convert tax relief into velocity, formalise loose-to-pack demand, and build durable share gains before the market reaches a new equilibrium for the next decade.