Maggi, the beloved two-minute noodles in India, may see a price increase starting January 1, 2025, as reported by Asianet News. This potential hike is linked to the ongoing trade dispute between India and Switzerland, which is expected to impact the cost of these popular instant noodles.

The price increase is tied to a significant shift in international trade relations: Switzerland has announced the suspension of the Most-Favored-Nation (MFN) clause under its 1994 Double Taxation Avoidance Agreement (DTAA) with India, effective from January 1, 2025.

Hence, this decision may force Swiss companies, including Nestlé, to incur higher costs in the form of up to 10% tax on dividends earned from Indian sources, a rate which is now higher than the previous one.  

Notably, Nestle India announced that Maggi sales hit six billion servings in the 2023-24 financial year, cementing India as the brand’s largest market globally reportedly. Adding further, Nestle India also noted that it sold 4.2 billion fingers of the popular chocolate KitKat, making India its second-largest market.  

India-Switzerland Trade Tension 

The controversy erupted following a 2023 ruling by India’s Supreme Court, which clarified that the MFN (Most Favoured Nation) clause does not apply automatically and must be explicitly notified by the Indian government. Switzerland contended that it was not receiving the same benefits extended to other countries with more favorable tax treaties. In response to this lack of reciprocity, Switzerland chose to suspend the MFN clause. 

How India-Switzerland Tax Disputes Could Impact Consumers 

The additional tax burden on companies is likely to be passed on to consumers, leading to higher prices for products like Maggi and other Nestle items in India. This highlights the ongoing challenges in trade between India and Switzerland and underscores the significant impact of international tax policies on everyday consumer goods.