Maggi noodle prices may rise from January 1 due to tax changes

New Delhi: The cost of Maggi noodles, a popular two-minute snack, could increase starting January 1, 2025, as Nestlé, its manufacturer, faces higher operating costs in India. The price hike is attributed to Switzerland’s suspension of the Most-Favored-Nation (MFN) clause in its 1994 Double Taxation Avoidance Agreement (DTAA) with India.

The move follows a 2023 ruling by the Supreme Court of India, which stated that the MFN clause in the DTAA does not automatically apply and requires explicit notifications for implementation. Switzerland opposed this interpretation, arguing that it denies the country tax benefits available to other nations under India’s agreements with Slovenia and Lithuania.

Citing a lack of reciprocity, Switzerland decided to suspend the MFN clause. As a result, Swiss companies like Nestlé will now face a higher profit tax rate of up to 10%, compared to the previous 5%. Nestlé’s appeal for a reduced tax rate was dismissed by the Supreme Court, increasing the company’s tax liabilities.

The additional tax burden is expected to reduce Nestlé’s profits, compelling the company to revise its pricing strategies, potentially leading to higher prices for Maggi and other products in India.