Colgate Faces Heat in Maharashtra as Distributors Suspend Purchases from May 12

Colgate Palmolive (India) finds itself embroiled in a growing dispute with its distributor network in Maharashtra. The All India Consumer Products Distributors Federation (AICPDF), which represents a wide base of FMCG distributors across India, has announced a suspension of product purchases from the oral-care giant starting 12 May 2024. The move stems from unresolved issues regarding trade credit notes issued without a corresponding Goods and Services Tax (GST) application.

According to AICPDF, several distributors have received show cause notices and tax recovery orders from GST authorities. These legal notices demand dues totalling around ₹200 crore, effectively shifting the tax burden onto the trade partners. The distributors argue that the responsibility for this liability lies with the company, not the middlemen.

Legal Pressure Mounts Amid GST-Linked Credit Notes

The core of the GST dispute dates back two years, when Colgate Palmolive (India) reportedly issued trade credit notes without including the applicable GST. This omission has now resulted in demands from tax authorities for the unpaid dues, along with interest and penalties. AICPDF claims this has placed its member distributors under significant legal and financial stress.

The distributors have called for clarity and accountability, expressing that they were not adequately informed or prepared for such implications. The Federation insists that this unresolved issue could evolve beyond Maharashtra into a nationwide campaign if the company does not engage in a resolution.

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Quick Commerce Push Triggers Pricing and Channel Conflict

Beyond the GST controversy, another major concern raised by the distributor community relates to the company’s strategy around quick-commerce (qcom) platforms. AICPDF alleges that Colgate Palmolive (India) is aggressively supplying stock to qcom players, leading to steep consumer discounts sometimes as high as 50–60%.

These discounts reportedly bring down product prices to levels below what traditional distributors and retailers pay to procure them. 

Falling Sales, Demotivated Field Force, and Rising Attrition

The effects of this dual challenge GST liability and qcom discounting are visible on the ground. AICPDF reports that general trade volumes have plummeted by more than 50% in several districts across Maharashtra. Field sales executives, once the backbone of last-mile service delivery, are reportedly demotivated due to unattainable sales targets and lost incentives.

High attrition rates have further worsened operational efficiency, weakening the traditional distribution network that helped Colgate build a strong presence across India’s hinterlands.

Petition Filed Against Quick-Commerce Giants

The conflict with Colgate is not the only battle AICPDF is fighting. In March, the federation filed a petition with the Competition Commission of India (CCI) against leading qcom platforms. The petition alleges that these companies engage in deep discounting and enter exclusive supply or distribution arrangements, disrupting fair competition in the consumer goods market.

The outcome of the CCI investigation could have wider implications for how FMCG companies balance traditional trade relationships with the fast-evolving world of quick-commerce.

Conclusion

As the stand-off unfolds, the Colgate case has emerged as a flashpoint highlighting deeper frictions in India’s FMCG supply chain. The tension between legacy distribution channels and emerging digital-first platforms like qcom is becoming increasingly difficult to ignore. Distributors, long considered a backbone of the FMCG sector, are now pushing back to protect their role and profitability in the face of evolving strategies.

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