The upcoming Union Budget is expected to be a milestone event for players associated with the country’s consumption story.
Impacted by the government’s note-ban decision, businesses in the fast moving consumer goods (FMCG) and consumer durables industry are seeking measures from the government that will help the tables turn to their advantage.
Vivek Gambhir, managing director, Godrej Consumer Products Ltd, says this Budget will be a crucial one to get the economy on a faster growth track while offering various stimuli to revive consumer confidence. “The need of the hour is to lift more people out of poverty, improve the living standards of millions of Indians, in both rural and urban areas, and enable more Indians to live economically empowered lives,” he said, adding that the government should accelerate its pro-growth, pro-reform agenda.
According to players in durables industry, domestic consumption has got a consistent beating over the past 3-4 quarters. The gross domestic product (GDP) estimate has already slipped to 7.1% from above 7.5% before demonetization.
That apart, industry output also experienced negative growth and demonetization sucked out liquidity and stalled consumption.
“The economy is challenged by circumstances to hold its head high. While all efforts are being taken by the government to put long-term reforms in place there are immediate short-term implications that are affecting economic growth. In this backdrop, rather than going for an all-populist Budget, the need of the hour is to provide necessary fillip to spring up immediate economic growth, which is repeatedly striving to bounce back, coupled with restoring investor and consumer confidence,” said Saibal Sengupta, CFO, Usha International Ltd.
The consumer durables industry awaits recovery from the demonetization phenomenon and anticipates to be placed in the 18% slab in the upcoming goods and services tax (GST) regime.
Calling the 2017 Budget a nail-biting affair, Manish Sharma, president and CEO, Panasonic India and South Asia, said, the common man can expect a revision in the tax slab rates which could translate into higher disposable income. “A healthy passbook will aid in a better lifestyle with increased spends on consumer durables. Moreover, the imposition of a higher basic customs duty on goods will curb imports and promote local manufacturing,” he said, adding that a clarity on duty differential for mobile handsets will give the necessary impetus to Make-in-India under the GST regime.
The consumer appliances segment also awaits policies and incentives that could assist the players during the initial phase of GST implementation, which will entail some amount of uncertainty, and hence anxiety, on the part of the business fraternity.
“The forthcoming Budget needs to spell out policies to ensure that maximum domestic manufacturing can be achieved across the segment. There should further be incentives and tax concessions for manufacturing energy-efficient products, which are the need of the hour. The recent demonetization move and the resultant cash crunch have dampened customers’ buying sentiment. Hence, there should be urgent policy measures to spur consumption for economic growth,” said Kamal Nandi, business head and EVP, Godrej Appliances.