As the 2024-25 budget announcement draws near, FMCG, retail, and food and beverage (F&B) sectors are buzzing with anticipation. Industry stakeholders are vocal about their hopes and expectations from the finance minister, each highlighting the crucial measures that could drive growth, innovation, and employment. Here’s a deep dive into what the experts are saying.
Favourable environment for culinary ventures
“As the 2024-25 budget looms on the horizon, the hospitality and food industry is abuzz with anticipation,” says Vikrantt Singh, Founder & MD of Bansooriwala’s.
He stresses the importance of streamlining GST structures for simpler compliance and the need for incentives to encourage startups. “Simplified tax regimes and incentives for startups will not only encourage entrepreneurship but also boost employment and economic activity.”
Singh is also hopeful for support in infrastructure development. “Investments in supply chain enhancements and cold storage facilities can significantly improve the efficiency and quality of our offerings,” he adds. The integration of technology in the food industry, through subsidies for advanced kitchen equipment and digital platforms, is another key area of focus.
“We are optimistic that the upcoming budget will address these areas, creating a more favourable environment for the growth of traditional and modern culinary ventures alike,” he adds.
Push to consumption wave
Sameer Gandotra, Founder & CEO, Frendy sees the upcoming budget as crucial for maintaining the momentum of consumption, particularly in rural areas.
“The government should double down on their agricultural and rural development initiatives, which would boost income levels and consumer spending,” he asserts. Gandotra also hopes for clarity on the National Retail Policy, which he believes could be a game-changer.
“Affordable and low-interest credit, stability of tax rates (GST) for staples, and a push for digitization are what the Indian retail space needs to continue the consumption wave,” he adds.
FMCG sector wishlist
Discussing the budget expectations, Balasubramanian A, Vice President, TeamLease Services, cites certain areas which FMCG stakeholders expect the government to improve on.
He emphasizes the need for increased allocation for rural infrastructure. “Improved rural infrastructure like roads and cold storage facilities could enhance supply chain efficiency and reduce wastage, potentially increasing demand by 10-15% and generating 1-2 million jobs in construction, logistics, and related sectors,” he explains. This focus on rural development aligns with the broader goal of boosting rural demand, a concern shared by many FMCG leaders.
Support for domestic manufacturing also tops his list. “Incentives for local production through initiatives like the Production Linked Incentive (PLI) scheme for the food processing industry can attract investments of INR 5,000-10,000 crores and create up to 1 million jobs in manufacturing and allied sectors,” Balasubramanian notes.
He also discusses labour law compliance and gig worker recognition, since the number of gig workers employed in e-commerce and hyper-local delivery is constantly increasing in urban and tier-1 cities.
“The developing digital economy and its labor force would suffer if a legislative framework for gig workers is not swiftly established,” he says.
Continue Exploring: FMCG & agriculture sectors push for infrastructure and technology boost in pre-Budget consultations
Retail sector wants e-commerce infra
Retail sector is seeing a multipronged growth, however, players still have asks from FM Sitharaman. Those demand includes simplification of GST for both online and offline businesses that could create a level playing field and boost compliance.
“A unified and simplified GST regime can potentially increase formalization in the retail sector by 15-20%, impacting the sector by INR 15,000-20,000 crores,” Balasubramanian states.
He advocates for improvements in logistics and delivery infrastructure that benefit both e-commerce enterprises and customers.
“It will potentially reduce delivery costs by 10-15% and expand the e-commerce market by INR 20,000-25,000 crores within 3 years. This could lead to significant job creation in e-commerce logistics, warehousing, and related sectors,” he says.
Balasubramanian also advocates for relaxation in FDI norms for multi-brand retail, which could attract substantial investments and create millions of jobs. “Allowing greater FDI in multi-brand retail could attract INR 20,000-30,000 crores in investments and create 1-2 million jobs.”
Continue Exploring: RAI pushes for tax cuts and policy reforms ahead of Union Budget FY25 to boost retail sector
More power to PLI scheme
In this upcoming budget, industry is looking forward to more aggressive PLI schemes in food processing, expanded to include additional products. Sanket S, Founder, Scandalous Foods advocates for subsidies in warehousing and cold chain logistics, coupled with regulations on aggregator commissions.
“We hope for a directive compelling banks to promote CGTMSE schemes for startups, fostering growth without diluting equity. The budget’s focus on diverse financial avenues such as FDI percentages, IPOs, angel networks, syndicates, SME listings, seed capital, and private equity is crucial for supporting the multifaceted needs of the dynamic food industry. Furthermore, emphasizing tools like Credit Valuation Adjustment (CVA) and Cost-Benefit Analysis (CBA) is essential for risk mitigation and informed decision-making,” he says.
While adding to the list, Anubhav Agarwal, MD and CEO, BN Group expect new regulations that successfully address issues faced by rural communities while protecting the interests of oilseed producers and the oleochemical sector.
“We anticipate the Government will address the gap between MSP of crops and prices for final processed, as it will further boost the growth and development of the sector.”
Boost to wellness sector
Simrat Kathuria, CEO and Head Dietitian at The Diet Xperts is also looking forward to measures that further holistic health and wellness in India.
“Increased funding and support for nutrition and health education programs are essential in combating lifestyle diseases,” she says. Kathuria believes that incentives for digital health initiatives could enhance the reach of personalized dietary counseling, especially in Tier 2 and rural areas.
“Reducing GST on health supplements and essential nutritious foods will make healthy living more affordable and accessible,” she continues. Kathuria also highlights the importance of supporting local, organic food production and simplifying financing options for wellness services. “Offering tax benefits for preventive health measures can encourage individuals to invest in their health proactively,” she concludes.
The food, FMCG, retail, and F&B sectors have clear budget expectations: support for rural infrastructure, incentives for local manufacture, streamlined GST regimes, and a focus on digital and health programmes. As the government prepares to release its budget, these views from industry experts offer a road map for promoting growth, innovation, and employment in these vital industries.
Industry needs GST rationalisation
In anticipation of the Union Budget 2024, the cookware retail industry is closely monitoring certain major expectations that might determine the sector’s future.
Sunil Agarwal, Director at Vinod Cookware highlights that sector anticipate changes in rationalizing the 18% interest rate on overdue tax bills. “There are various instances in which such a short payment of tax is due to business losses, cash flow concerns, and so on, rather than an attempt to scam the system. The government might consider lowering the interest rate for non-fraudulent cases involving MSME taxpayers,” he says.
Finally, the Union Budget 2024 may provide a chance for the government to address the administrative issues encountered by MSMEs. The government can significantly impact the profitability of this crucial industry by implementing reforms that simplify compliance, cut costs, and improve operational efficiency, thereby promoting economic development and job creation, he adds.
The food, FMCG, retail, and F&B sectors have clear budget expectations: support for rural infrastructure, incentives for local manufacture, streamlined GST regimes, and a focus on digital and health programmes. As the government prepares to release its budget, these views from industry experts offer a road map for promoting growth, innovation, and employment in these vital industries.