The Union Budget 2025’s tax reforms are expected to drive significant growth in consumer spending, benefiting various sectors, largely FMCG
Bengaluru: Retailers and consumers alike have welcomed the tax cuts proposed by the Finance Minister Nirmala Sitharaman in the Union Budget 2025 presented on Saturday, with some measures offering significant relief to the middle class.
The FM announced that annual incomes up to Rs 12 lakh will be exempt from income tax and revamped the tax slabs in the budget. Those earning Rs 18 lakh annually will also benefit from a Rs 70,000 tax reduction, which will increase disposable income and could drive higher spending in retail and e-commerce.
“The budget has rightly focused on offering fiscal impulse to boost consumption,” said MP Ahammed, Chairman, Malabar Group, in response to the budget.
“With personal income tax reform, it will free up disposable income to boost urban consumption. It will boost the spending power of the middle-income segment and enhance consumer sentiment—both critical drivers of economic growth. For the retail and jewellery sector, a rise in consumption directly translates into stronger demand, fuelling expansion and employment generation,” he added.
In her speech, FM also stated that the government will establish a new tax slab structure to lower middle-class taxes and give them more money. The movie may increase household consumption, savings, and investment.
Sitharaman also hinted that the collections from income tax will rise 14.4% to Rs 14.38 lakh crore in financial year 2025 and corporate tax may increase 10.4 per cent to Rs 10.82 lakh crore.
“A key highlight is the new tax regime aimed at reducing the middle-class tax burden, which is expected to boost disposable income and fuel demand for consumer brands across sectors such as retail, lifestyle, and technology,” said Dheeraj Gupta, Founder of Jumboking, a homegrown fast-food brand. “With a huge jump in Gen Z consumption spending, businesses catering to this dynamic demographic stand to benefit significantly.”
Experts believe that the demand for consumer goods, including FMCG, and durables, is expected to rise. The consumer goods sector, particularly FMCG, has faced sluggish demand in recent quarters due to a slowdown in urban areas, primarily affecting lower- and middle-income households.
“The Union Budget 2025 takes a balanced approach by strengthening rural infrastructure, manufacturing, and consumer spending—three critical pillars for the FMCG sector,” stated Aasif Malbari, Chief Financial Officer – Godrej Consumer Products Ltd. “Additionally, tax reforms benefiting the middle class will increase disposable income, further fueling demand across essential and aspirational FMCG categories.”
On a similar note, Rajiv Kumar, Vice Chairman of DS Group, an FMCG conglomerate company, pointed out that, the foregoing of Rs 1 lakh crore in direct taxes and full tax exemption up to Rs 12 lakh income under the new regime is expected to boost consumer spending, benefiting the FMCG sector, with the middle class and salaried professionals driving demand in these areas.
“It is a balanced budget for corporates as well as individuals and will have a multi-year effect going forward, supporting overall growth and encouraging inclusive development and private investment,” added Kumar.
As spending power increases, there will be a growing shift towards healthier lifestyles, a trend that is now becoming accessible even to the middle class.
“We are seeing a growing awareness of nutrition, with more people making healthier food choices. As incomes rise, particularly within the expanding middle class, the demand for nutritious foods is increasing, making the government’s focus on improving the accessibility and affordability of essential food items a welcome move,” said Angshu Mallick, MD & CEO – Adani Wilmar, an edible oil company.
