Consumption boost and inflation control emerge as the top two asks of industry representatives from the upcoming Interim Budget 2024
New Delhi: On 1 February entrepreneurs across sectors, tax professionals and analysts among scores of individuals will be glued to their devices to learn what Finance Minister Nirmala Sitharaman has for them as she presents in her sixth budget to the nation.
Being an election year, this will be an interim budget, which is usually marked with lack-lustre or populist announcements with minimal potential to impact the outcome of the polls.
However, media reports that this Budget might be different and is most likely to have an emphasis on tax-saving among other populist measures like policies that benefit women, youth and the elderly. What will it have for India Inc.?
IndiaRetailing spoke to leaders across the retail spectrum to find out what they expect from the Budget 2024.
Inflation control
Industry representatives expect the budget to address some immediate challenges faced, chief among them is to rein in inflation.
“To support a more inclusive economic growth the government could consider proactive measures aimed at future controlling inflation and stimulating consumption in the larger economy. A consumption boost will lead to a cycle of sustained economic growth in the long run,” said Aasif Malbari, chief finance officer, Godrej Consumer Pvt. Ltd.
Consumption boost
Like Malabari, consumption boost ranks top for the apex body Retailers Association of India (RAI) too in its Budget 2024 recommendations to the government. RAI suggested putting more money into the hands of people by modifying income tax norms to achieve the same.
According to Malbari attention should also be directed towards enhancing rural job creation and consumption, enhancing incentives for capital expenditure, and incentivizing innovation and research and development (R&D).
“As the purchasing power of Indian consumers rises, there’s a strategic need for the budget to recognize and support this shift, particularly in the evolving role of branded goods in both professional and leisure lifestyles,” Anand Aiyer, chief executive officer of Arrow said.
Speaking for the FMCG industry Shammi Agarwal, Director, Pansari Group said that the FMCG sector’s expectations hinge on amplified income tax slabs, increased grants, and a resolute focus on encouraging innovation.
Focus on logistics tech
Everyone acknowledges the improvement in the pace and quality of infrastructure development in the country in recent years. Now, logistics players are looking for initiatives to improve the tech side of business.
“Attention now must shift towards the development of logistics technology. The future of logistics will be shaped by the efficiency, resource optimization, and resilience of our supply chains,” said Dr. Ashvini Jakhar, Founder and CEO, of full-stack supply chain player Prozo.
“Therefore, it is imperative to extend support to the companies engaged in the development of integrated supply chain facilities, including warehouses, green last-mile delivery networks, and innovations like AI-powered Supply Chain Management (SCM) solutions,” he Jakhar added.
This can lead to reduced costs and lower carbon footprint of the transportation sector in India.
“We look forward to proactive measures that foster innovation, incentivize digitalization, and strengthen the backbone of our nation’s commerce,” Jakhar said.
Exim impetus
There has been a significant increase in cross-border trade with several Indian brands eyeing international business and expansion. As per the Ministry of Commerce, in November 2023, India’s overall exports (merchandise and services combined) were estimated at $62.58 billion, recording a growth of 1.23% over November 2022.
Brands now expect a further import-export fillip from the government.
“The upcoming budget must strategically align policies with evolving consumer trends, digital technology advancements, and streamlined international trade,” said Vick Rana, chairman and chief executive officer of Red Ridge Global which manufactures and retails toys, stationery and homeware.
Rana was particularly speaking in the context of the toy and crockery industries. “This economic revitalization is akin to orchestrating a harmonious future, marked by vibrant international market participation, export growth, and effective import facilitation in both domains,” he said.
Rajendra Gandhi, MD, Stovekraft Ltd., which manufactures cooking appliances under Skava, Pigeon and Gilma brands too stressed the need for infrastructure boost and government schemes that benefit the cookware and kitchen appliances segment.
“To boost domestic manufacturing and attract large investments, the government introduced the Production Linked Incentive Scheme (PLI). We expect the government to come up with more schemes to encourage the manufacturing of kitchenware within the country. It would also be beneficial to provide higher incentives for companies exporting these products,” he said.
Jewellery retail depends heavily on imports. To unlock the potential of the organized jewellery retail segment, the budget needs to propose a reduction in the import duty on gold, according to M. P. Ahammed, Chairman, Malabar Gold & Diamonds.
“A higher gold import duty is detrimental to the growth of the organized jewellery retail sector, as it indirectly promotes gold smuggling and unauthorized grey market transactions,” he added.
Easing of taxes
Various direct and indirect taxes and rates including income tax directly impact a retail business. Although GST has greatly simplified the country’s tax regime, slabs and input credit have been the bone of contention for various segments of the retail industry.
“Whether it’s footwear or apparel, the importance of a uniform GST rate cannot be overstated for ensuring fairness. Our appeal for a standardized GST rate transcends a mere plea for equality; it signifies a crucial step towards fostering a level playing field for all industry participants,” Shivendra Nigam, chief financial officer, Cantabil Retail India said.
Speaking for the restaurant sector, Debaditya Chaudhury, managing director of Chowman said, “Since we are restricted from claiming Input Tax Credit on GST paid on several factors like rent, security, packaging, fresh products, aggregator apps, marketing and branding; a cascading tax effect is created, giving rise to operation cost that hinders profitability. We expect the honourable government to look into this, he said.
He also called attention to lending rates for MSMEs, which start at 7.65%. “This rate of interest can be reduced and loan disbursal must be expanded. Simultaneously, streamlining income tax by reducing it for such sectors can posit a relief to the restaurant industry,” he added.
Managing inflationary forces with appropriate measures and keeping fuel and gas prices under control are other asks that can bring relief to the sector.
“The budget also needs to propose measures to control unaccounted business practices by implementing effective tax compliance and transparency mechanisms. The interim budget should also propose measures to create a broader pathway for growth for the organized jewellery retail segment,” Ahammed of Malabar Gold & Diamonds said.
The industry is looking forward to measures that will further support and promote fairness within the dynamic landscape of the retail sector.
