BENGALURU, Nov. 5 -- India's Rs.5 snack packet, long the industry's workhorse, is becoming a liability as rising input costs squeeze already-thin margins.

After years of shrinking pack sizes to protect margins, manufacturers are now trying to steer retailers and consumers towards larger, more profitable stock-keeping units (SKUs), while redesigning packaging to contain costs, industry executives told Mint. Some are also expanding premium offerings for modern retail and quick commerce to lift average selling prices.

Over the past three to four years, brands including PepsiCo-owned Lay's and Yellow Diamond have more than halved the weight of their Rs.5 packs, from 25-30g to 11-14g. But further cuts risk alienating consumers.

"Reducing gr...