India Inc hikes prices, shrinks packs as Iran war squeezes margins

AWL Agri Business

08/06/2026 02:30

    * Hindustan Unilever, Dabur, Godrej have rolled out price
hikes
    * Britannia preparing similar move; some firms trim product
sizes
    * Firms cutting costs to cushion margins, reworking supply
chains 

    By Praveen Paramasivam and Chandini Monnappa
    CHENNAI/BENGALURU, June 8 (Reuters) - From smaller packs on
shelves to higher prices at checkout, Indian companies are
scrambling to protect their margins as surging oil, freight and
insurance costs - and strained household budgets - pile on
pressure.
    The U.S.-Israeli war on Iran has disrupted trade routes and
lifted input costs globally, hitting import-reliant economies
like India harder, where a weaker rupee is adding to inflation
and complicating pricing decisions as demand remains uneven.
    "We are among the world's most vulnerable countries,"
economist Jayati Ghosh said, warning higher oil and fertiliser
costs, weaker Gulf demand, softer remittances and potential
capital outflows could stoke inflation and slow growth.
    Consumer goods makers Hindustan Unilever  HLL.NS , Godrej
Consumer Products  GOCP.NS  and Dabur India  DABU.NS  have
already rolled out low- to mid-single-digit price hikes across
categories, with Britannia  BRIT.NS  preparing similar moves.
    Pricing power remains weak in mass segments, with companies
holding the line on 10- to 20-rupee (11- to 21-cent) packs and
shrinking product sizes instead of raising prices outright.
    "We are reducing grammage because we can't breach those
price points," said Mohit Malhotra, global CEO at Dabur.
    Automakers Maruti Suzuki  MRTI.NS , Mahindra & Mahindra
 MAHM.NS , Tata Motors Passenger Vehicles  TAMO.NS  and Hyundai
Motor India  HYUN.NS  have also hiked prices.
    "We were left with no choice," said Partho Banerjee,
Maruti's senior executive officer for marketing and sales,
adding that raising prices was not good for customers,
especially first-time buyers.
    Airlines IndiGo  INGL.NS  and Air India are trimming
capacity, especially on fuel-heavy international routes, and
increasing fares to offset higher aviation fuel costs.
    Consumers are feeling the squeeze.
    "I have no family to feed, no school fees, and no monthly
payments on a car. I'm still watching my spending as prices are
up for almost everything, from travel to packaged food," said
Aditi Anjana, a Mumbai-based communications professional who is
in her 30s.
    
    BELT-TIGHTENING MODE
    With limited room to pass on costs, companies are turning
inward and cutting costs to cushion margins.
    Hindustan Unilever  HLL.NS  has cut advertising spend, while
others are trimming non-essential travel and marketing costs.
    "The scope for further cost-cutting is gradually narrowing,"
Axis Direct analyst Uttam Kumar Srimal said, adding prolonged
commodity and fuel inflation could force sharper price hikes or
margin hits.
    Sectors with high global exposure, including aviation, oil
and gas, chemicals, logistics and capital goods, may remain
under margin pressure, said Shweta Rajani, associate director at
Anand Rathi Wealth.
 
    RESETTING SUPPLY CHAINS
    Firms are also reworking supply chains to manage
disruptions. Companies with Middle East exposure are rerouting
shipments, diversifying sourcing, and shifting production. 
    Dabur, an Indian rival of Colgate-Palmolive, is using
alternative routes via Egypt and Turkey, while packaged goods
maker Britannia is bringing some production back home.
    Some firms are also front-loading purchases and closely
tracking demand to avoid overstocking, underscoring tighter
working capital discipline.
    Arvind Fashions  ARVF.NS  has advanced inventory buys to
lock in costs and is relying more on local suppliers, while Tata
Group retailer Trent  TREN.NS  is tweaking raw materials,
packaging, and product development.
    "My priority is not to take prices up," said Umashan Naidoo,
head of customer and beauty at Trent, which offers Gen-Z-focused
affordable trendwear through its brand ​Zudio.
    
 ($1 = 94.9450 Indian rupees)

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Input costs surge, margin pressure mounts across India Inc    https://reut.rs/4wYOoB0
Brent crude oil prices since Iran conflict began    https://reut.rs/4dKD04g
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 (Reporting by Praveen Paramasivam in Chennai and Chandini
Monnappa in Bengaluru; Additional reporting by Surbhi Misra;
Editing by Dhanya Skariachan and Himani Sarkar)
 ((Chandini.M@thomsonreuters.com;))