The government’s much-discussed GST 2.0 reforms were expected to provide significant relief to consumers and industries alike. While several daily-use essentials such as soaps, shampoos, hair oils, shaving creams, and toothpaste have witnessed a steep cut in GST from 18% to 5%, one major fast-moving consumer goods (FMCG) segment has been left out — detergents.
Valued at nearly ₹45,000 crore, the detergent industry is one of the largest in India’s FMCG basket. Yet, despite its critical role in household consumption, the category continues to attract an 18% GST rate. For detergent makers, retailers, and consumers, this omission is being seen as a “key miss” in the government’s consumption push.
Detergents: The Big Omission
The detergent category includes bars, powders, liquids, and pellets, with every major FMCG company having a strong footprint in the sector.
- Hindustan Unilever Limited (HUL): Surf Excel, Rin, and Wheel
- Procter & Gamble (P&G): Ariel and Tide
- RSPL Group: Ghadi detergent
- Nirma Ltd: Nirma detergent powder
- Jyothy Labs: Henko and Ujala
- Reckitt Benckiser: Vanish stain remover
Together, these brands reach millions of Indian households every day. But unlike other essentials that saw tax cuts in GST 2.0, detergents remain stuck at the higher 18% slab.
Executives from these companies declined to comment officially, but industry experts and analysts have expressed disappointment over the government’s decision.
Expert Views: Why Skipping Detergents Hurts
Industry observers believe that excluding detergents from GST rationalisation undermines the very purpose of the reforms, which was to reduce the tax burden on consumers and boost demand across sectors.
“I am surprised detergents were skipped, given that they are a daily-use necessity. The government’s stated goal was to make essential items more affordable for the common man, and detergents should clearly fall into that category,” said Krishnarao Buddha, FMCG veteran and consultant.
An executive from a top FMCG company added that a lower GST rate would have especially helped in expanding the liquid detergent market, a sub-segment that is growing rapidly but still remains underpenetrated compared to powders and bars.
The Rise of Liquid Detergents
One of the biggest trends in the Indian detergent industry today is the surging popularity of liquid detergents.
- A recent report by Numerator (formerly Kantar) revealed that liquid detergents are growing at an annual rate of nearly 58%, far outpacing the stagnant demand for powders and bars.
- Liquids are considered more convenient, easy to measure, and suitable for washing machines, making them a preferred choice for urban households.
Despite this, affordability remains a barrier. A reduction in GST could have made liquid detergents more accessible to middle-class consumers, thereby accelerating the shift from powders to liquids.
How Companies Are Pushing Liquids
FMCG companies have been investing heavily in liquid detergent formats, offering competitive prices and smaller pack sizes to attract first-time buyers.
- Godrej Consumer Products launched Godrej Fab in 2023 at just ₹99 per litre. Within a year, it achieved an annualised revenue of ₹250 crore, according to the company’s FY25 report. The goal is to double this figure to ₹500 crore by FY26.
- Hindustan Unilever (HUL) has been aggressively making its liquid detergents more affordable. Products like Rin Matic liquid detergent (₹99 for 800 ml) and mini Surf Excel liquid packs have been introduced to draw in new consumers. HUL has also worked to narrow the price gap between sachets and larger packs, encouraging consumers to upgrade.
With GST relief, these efforts could have gained even more traction, enabling brands to capture a wider audience across urban and semi-urban markets.
Why Input Costs Matter
Detergent pricing is closely tied to global crude oil trends, as Linear Alkylbenzene (LAB) — a key raw material — is derived from petroleum.
Manufacturers often adjust prices based on crude oil fluctuations, offering schemes, discounts, or price hikes depending on input costs. This volatility makes it even more important for companies to have tax relief that can cushion pricing pressures and provide stability to consumers.
By excluding detergents from GST rationalisation, analysts argue, the government may have unintentionally limited the sector’s ability to pass on benefits to end-users.
FMCG Industry’s Broader Expectations
The FMCG sector, which contributes significantly to India’s GDP, had been expecting GST 2.0 to provide a level playing field across essential categories.
While soaps, shampoos, toothpastes, and shaving products are now taxed at a more affordable 5%, detergents remain an anomaly. This uneven tax structure could potentially affect demand dynamics, as consumers are likely to feel the pinch when comparing similar categories of daily essentials.
Moreover, the decision is seen as a missed opportunity to boost rural demand, where detergents form a major share of household expenditure.
Government’s Focus vs. Industry Concerns
From the government’s perspective, retaining detergents at 18% GST may have been driven by revenue considerations. The detergent industry, being one of the largest FMCG segments, generates significant tax collections. A reduction in GST could have meant a substantial short-term revenue loss.
However, industry insiders argue that lowering taxes could have stimulated consumption and compensated for the loss through higher volumes. With India’s detergent market expected to expand steadily in the coming years, this could have provided long-term fiscal benefits as well.
Looking Ahead: Will Detergents See Relief?
The exclusion of detergents from GST 2.0 is not necessarily the final word. Industry stakeholders are expected to continue lobbying for rationalisation, especially given the strong case for detergents being a necessity product.
Analysts suggest that future reviews of the GST framework may consider detergents for tax relief, especially as the government balances consumer affordability with revenue stability.
For now, companies will continue to rely on their own pricing strategies, marketing campaigns, and pack innovations to make detergents — especially liquid formats — more attractive to Indian households.
A Missed Opportunity for Consumers and Industry
The GST 2.0 reforms have been largely welcomed for making everyday products cheaper and easing the burden on consumers. However, leaving out detergents from the list of tax cuts is being seen as a “missed opportunity.”
For FMCG companies, it means continuing to operate in a high-tax environment for one of their largest categories. For consumers, it translates into no immediate relief on a product that is an essential part of daily living.
As the FMCG sector adapts, the spotlight will remain on whether detergents eventually find their way into a lower GST bracket — a move that could benefit both businesses and households alike.
Disclaimer: This article is based on government announcements, industry reports, and expert insights. Tax policies and market trends are subject to change. Readers are advised to check official GST notifications for the latest updates.
