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Maggi prices likely to rise: Whether it’s late-night cravings, not feeling like cooking, being tired from a working day, wanting something hot in the cold, satisfying hunger in the mountains, or needing a quick meal, Gen-Z and Millennials think of Maggi first. However, now Maggi might become more expensive due to Switzerland’s decision to remove India’s Most Favored Nation (MFN) status. Let’s explore the connection between these two developments.
Impact on Swiss companies
Switzerland has decided to suspend the Most Favored Nation (MFN) clause from January 1, 2025, under the Double Taxation Avoidance Agreement with India. This clause came in the year 1994. Withdrawal of MFN status will have a direct impact on Swiss companies. These companies may now have to pay up to 10 per cent tax on dividends received from Indian income sources, which is less now. Now Nestle, the parent company of Maggi brand, is also a Swiss company. If the tax burden on Nestle increases, it can increase the prices of its products, one of which is Maggi. However, the company has not said anything about increasing the price yet.
What is the Most Favored Nation clause?
The clause of Most Favored Nation ensures that the parties involved in the agreements between the two countries get the same benefits. It has preferential trade terms. When a country is given this status, it is expected that it will cut tariffs. Also, the export-import of many products between the two countries also takes place without any duty. The country with MFN is given more priority in trade. However, Switzerland believes that India has not given it the same benefits as the countries with which India has more favourable tax agreements. In such a situation, now the Swiss government has decided to abolish this clause from the year 2025, citing a lack of reciprocity.
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