Maggi, the go-to comfort food for millions across India, might become more expensive starting January 1, 2025. This potential price hike is linked to Switzerland’s decision to suspend India’s Most Favored Nation (MFN) status under the Double Taxation Avoidance Agreement, increasing tax burdens for Swiss companies like Nestlé, Maggi’s parent company.
Switzerland’s MFN Suspension and Its Implications
Switzerland plans to withdraw the MFN clause for India starting January 2025, which was established in 1994. Under this clause, Swiss companies benefited from preferential trade terms, including lower tax rates. Without MFN status, Swiss companies could face a tax of up to 10 percent on dividends from Indian income sources, significantly higher than the current rate.
Impact on Nestlé
Nestlé, a Swiss company and the maker of Maggi, is directly affected by this development. The increased tax burden on Nestlé’s Indian operations may prompt the company to adjust product pricing to maintain profitability. Though Nestlé has not officially confirmed a price hike, the suspension of MFN status raises the possibility.
What Is the Most Favored Nation Clause?
The MFN clause ensures equal trade benefits between two countries. This includes reduced tariffs and duty-free import-export for specific products. Countries with MFN status are prioritized in trade relationships, enjoying favorable terms. Switzerland’s decision to revoke MFN status stems from its perception that India has not offered the same benefits it provides to other nations under more favorable tax treaties.
How It Could Affect Indian Consumers
Maggi’s potential price increase will likely impact millions of consumers who rely on it for affordability and convenience. Whether it’s a late-night snack, a quick meal during a busy day, or a comforting treat in the mountains, Maggi has become a staple in Indian households. A price hike may challenge its status as a budget-friendly favorite.
