FMCG companies expect Budget 2017 to be growth oriented to boost demand

The Government of India will present its Union Budget for 2017-18 on February 1, 2017. Representational image of Godrej Consumer Products. Image Source: Official Website

After taking a demonetisation hit, fast moving consumer goods (FMCG) companies are pinning hopes on a growth oriented Budget to see a revival in consumer confidence and create demand both in urban and rural markets.

"We are expecting a growth-oriented Budget with various stimuli to revive consumer confidence... Proactive reforms to stimulate demand by increasing the money in the hands of the emerging middle class and rural India, this will help bring FMCG growth back on track," Godrej Consumer Products Managing Director Vivek Gambhir told PTI.

Kolkata-based Emami too is expecting a growth oriented budget "to boost consumption, increase public investment, promote digitisation, broaden tax base and lead higher growth" and improvement of business sentiments.

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"It (Budget) should aim at clarifying policies particularly with respect to General Anti-avoidance Rule (GAAR), Place of Effective Management (POEM), GST etc. As with every other Budget, restraining deficits and delivering higher growth is going to be a great challenge," said Emami CFO & CEO Finance Strategy & Business Development N H Bhansali.

He further said, "While tax rates are expected to reduce with increased basic exemption limits, but taxpayers base is expected to broaden. Ease of doing business would be another focus area in currently subdued business environment. Agriculture, infrastructure and service sectors are also expected to get due attention and support."

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Marico too is looking for a Budget 2017 in which the government would focus on boosting the rural sector and agricultural productivity besides providing benefits to the salaried taxpayers in order to increase disposable income in the urban markets, which would drive consumption.

"We are expecting an all-inclusive, progressive Budget to assist the sustainable economic growth of our country. In order to do so, it is essential for the government to focus on three crucial factors -- boosting the rural sector and agricultural productivity, providing benefits to the salaried taxpayers in order to increase disposable income in the urban markets," said Marico MD & CEO Saugata Gupta.

He added that this was important to encourage private investment and leverage demographic dividend as job creation is very critical.

FMCG firms like Hindustan Unilever (HUL) and Jyothy Laboratories, which have come up with their October-December results, have admitted that their sales were impacted due to "adverse liquidity conditions" due to demonetisation.

Cholayil Group, maker of ayurvedic soap Medimix, is expecting tax incentives for the FMCG products based on traditional Ayurveda.

"Thanks to the upsurge in consumer buy of body care products with ayurvedic ingredients, most FMCG companies have in the recent past entered this category. The expectation from the Budget 2017 is that such products with Ayush ingredients be taxed at a significantly lesser rate under GST," said Cholayil Ltd MD & CEO Pradeep Cholayil.

He further added, "It will also be very good if there is a specific boost to the ayush/natural ingredients manufacturing akin to tax holidays that are extended in some of the manufacturing sector. Ayurveda-based FMCG manufacturing Export Oriented Unit (EOU) parks can be promoted to give a boost to exports, and encourage players who have a strong product portfolio in the space."

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