With a focus on ease of business, job creation, and consumer spending, the budget sets the stage for long-term retail growth and economic expansion.
New Delhi: Finance Minister Nirmala Sitharaman presented the Union Budget 2025, marking her eighth consecutive budget and the first full budget of Prime Minister Narendra Modi’s third term. The budget focused on boosting retail, manufacturing, innovation, and digital transformation, aiming to strengthen India’s position as a global economic powerhouse while ensuring inclusive growth.
India’s Retail and Manufacturing Push
One of the major highlights for the retail sector was the government’s announcement of new measures to make India a global toy manufacturing hub. This aligns with the Make in India and Atmanirbhar Bharat initiatives, encouraging domestic production and reducing dependence on imports, particularly from China. This move is expected to benefit manufacturers, retailers, and exporters, creating new business opportunities and employment.
Additionally, the footwear and leather sectors will receive a focused scheme to enhance manufacturing and exports. These industries, which contribute significantly to India’s retail market, will benefit from policy support, improving global competitiveness, and job creation.
Startup and Innovation Support
Recognizing the role of startups in India’s innovation ecosystem, the government has announced another round of the Fund of Funds for Startups (FFS) scheme with a corpus of Rs 10,000 crore. This initiative, first launched in 2016, has played a key role in providing capital to startups at early, seed, and growth stages, reducing dependence on foreign investment and encouraging homegrown venture capital funds.
The Department for Promotion of Industry and Internal Trade (DPIIT), which has already recognized over 1.5 lakh startups, will continue to oversee the scheme, with SIDBI acting as the operating agency. This initiative underscores the government’s commitment to fostering a strong innovation-driven economy.
To further boost innovation, the government will provide Rs 20,000 crore to promote research and development in partnership with the private sector.
Ease of Business and Regulatory Reforms
As part of broader “transformative reforms”, Sitharaman announced that the government will update outdated regulations to align with technological advancements. This move is particularly significant for e-commerce, digital retail, and fintech players, ensuring smoother operations, regulatory compliance, and business expansion.
To further simplify business processes, the government has also announced the rationalization of Tax Deducted at Source (TDS), reducing rates and the number of thresholds.
Handicraft and Gig Economy Boost
The government will launch a new scheme to promote handicraft exports, benefiting artisans, small businesses, and online marketplaces specializing in handcrafted goods.
In a significant move for the gig economy, the government will provide identity cards and register 1 crore gig workers on the e-Shram portal. This will formalize employment opportunities, improving access to financial services, insurance, and social security benefits for workers involved in last-mile delivery, warehousing, and logistics—all crucial to India’s booming retail and e-commerce sector.
“Gig workers of online platforms provide great dynamism to the new-age services economy. Recognizing their contribution, our Government will arrange for their identity cards and registration on the e-Shram portal. They will be provided healthcare under PM Jan Arogya Yojana. This measure is likely to assist nearly 1 crore gig-workers,” said Sitharaman.
The government has also announced a Rs 2 crore term loan for 5 lakh first-time women, SC, and ST entrepreneurs, further supporting inclusive economic participation.
Fixing Inverted Duty Structures
To support domestic manufacturing, the government has announced an increase in basic customs duty on interactive flat panel displays from 10% to 20%. While this might lead to higher costs for retailers and businesses reliant on imported digital screens, it is aimed at boosting local production.
Consumer Benefits: Higher Disposable Income
In a major relief to the middle class, Finance Minister Nirmala Sitharaman exempted annual income of up to Rs 12 lakh from income tax and rejigged tax slabs as part of her reformist Budget. Individuals earning Rs 18 lakh annually will also receive a tax reduction of Rs 70,000, increasing disposable income and potentially boosting spending in retail and e-commerce.
Fiscal Strategy and Economic Growth
Sitharaman laid out a blueprint for next-generation reforms, including:
- Raising the FDI limit in the insurance sector
- Simplification of tax laws
- Cutting duties on intermediaries while providing enhanced fiscal support for welfare measures
This she did while sticking to the fiscal consolidation roadmap, projecting the fiscal deficit to come down to 4.4% of GDP in FY 2025-26. For the current financial year, the fiscal deficit has been pegged at 4.8% of GDP.
To bridge the fiscal deficit gap, the government is set to raise resources from the market to the tune of Rs 11.54 lakh crore on a net basis for the next fiscal year.
What This Means for the Retail Sector
The Union Budget 2025 reinforces India’s commitment to domestic manufacturing, startup growth, and digital transformation, all of which are crucial for the retail industry’s future. With a focus on ease of business, job creation, and consumer spending, the budget sets the stage for long-term retail growth and economic expansion.
