The Finance Minister Nirmala Sitharman unveiled the Union Budget 2023-24 on Wednesday, which analysts believe offers something for everyone.
The retail industry praises it as a pro-growth, common man’s budget. According to industry experts, the Budget would raise customers’ discretionary money, improve the ease of doing business and infrastructure development, and promote a good industry and consumer morale.
Reduction In Customs Duty
The government provided relief to producers by lowering customs tax on television panels to 2.5 per cent. Surely, this move is welcomed by most of the producers and retailers as this decision was a much-awaited one.
“The move by the Centre to halve the basic customs duty on specified parts of open cells of TV panels to 2.5 per cent will help consumers afford LED televisions. This is a real game-changer moment for the industry,” said Arjun Bajaj, Director – Videotex International.
LED television prices are expected to fall by 1 to 1.5 per cent, with the gains being passed on to customers. This will considerably improve domestic television manufacturing and allow it to compete with global brands, he said.
“Nobody would have assumed that 33 per cent up in capex i.e. 10 lakh crore would be allocated. So strategically there is nothing which is left out, in fact we are overwhelmed by the allocation. But, tactically, there is always one or the other thing which remains. We were expecting that the import duty on open sale for television itself will go down to zero from five which will make these products more affordable for consumers,” said Manish Sharma, Chairman- Panasonic Life Solutions India.
However, the duty has been cut from 5 to 2.5 in certain portions, which means that the impact may take some time to manifest. So, while consumers may not see immediate benefits in terms of price reductions, this enabling will occur on the supply side, gradually making local manufacturing competitive. So that’s the strategy the administration has chosen, he added.
To further deepen domestic value addition in the manufacture of mobile phones, the finance minister announced a tariff reduction on the import of certain inputs used in the manufacture of mobile phones. As a result, analysts predict that mobile phones will become more affordable.
Also, the relief in inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year.
“It is encouraging to see reduction in custom duties for inputs/parts of certain electronic items like lithium Ion batteries, TV, Camera Lens will improve the feasibility for enhancing backward integration and subsequently enabling local manufacturing of electronics,” Sharma said.
The Union Budget seems to be a populist budget. Firstly, the direct tax revised slabs would mean higher disposable income, which will be good for the FMCG industry, said Krishnarao Buddha, Senior Category Head-Parle Products.
“Doubling of per capita income to almost 2 Lakh will again propel consumption and create increased demand. Focus on increasing farm income, focus on 5G app development are all progressive steps for the nation. We can expect to grow the GDP at 7-8 per cent”, he said.
Rajat Wahi, Partner, Deloitte India also believes that the government initiatives will lead to higher sales of FMCG products.
“I feel that these initiatives, along with the various initiatives to improve farmer incomes will go a long way in driving rural consumption, leading to higher sales of autos, tractors and FMCG products,” he said.
The FMCG industry has exhibited a healthy recovery despite global inflation and economic slowdown during the past two years. With the budget estimating India’s growth at a rate of 7 per cent in FY2023, said Samir Kumaar Modi, MD- Modi Enterprises.
Pradhan Mantri Matsya Sampada Yojana
The government will launch a new sub-scheme of PM Matsya Sampada Yojana with targeted investment of ` 6,000 crore to further enable activities of fishermen, fish vendors, and micro & small enterprises, improve value chain efficiencies, and expand the market.
“Attempts are made to reduce the shrimp feed costs for marine products. This is a welcome move as lesser feed prices will largely benefit in reducing the shrimp production costs,” said Shan Kadavil, Co-founder, FreshToHome.
“We can leverage this reduced production costs to compete with other countries in international markets,” he added.
Kadvil says that by setting up the agricultural accelerator fund will pave the way to attract fresh ideas, tech-driven solutions, and increased use of technology in the agricultural sector.
“Tech-pivoted growth is the need of the hour. This will play a key role in increasing production, reducing production costs, reducing wastage, and helping farmers gain higher returns,” he said.
Increase In Customs Charge On Gold Goods
The basic customs charge on goods created from gold bars has been raised for the jewellery industry. As a result, gold, silver, and diamonds are projected to become more expensive. Though the jewellers are confident that increased disposable income due to changes in the tax slab will improve spending power, thus benefiting the overall consumer sector including the organised jewellery retail industry.
“Initiatives such as PM Vishwakarma Kaushal Samman programme are a pioneering step towards empowering traditional artisans and craftspeople – the backbone of our industry. This newly-conceptualised assistance package will be a welcome relief to the community and will enable them to equip and upgrade themselves with changing times,” said Ramesh Kalyanaraman, Executive Director – Kalyan Jewellers
The government’s innovation-led and technology-driven approach reflects in its investment towards research on lab-grown diamonds, which will generate new employment opportunities, while resonating with the export as well as urban Indian market, he said.
“The increase in the import duty of silver will not have a significant impact for us, as our primary focus is on gold, diamond and other precious stone studded jewellery,” he added.
Overall Relief For Common Man
This Budget will bring relief to the common man reeling under mounting inflation rates and economic turmoil with revision of personal income tax slabs and promise of more employment and social security schemes, said Gautam Hari Singhania, Chairman & MD- Raymond Group.
“This reflects the government’s intent to enhance disposal income, enable discretionary spends and provide impetus to the industry,” he said.
“By encouraging more private investment in infrastructure, the government has ensured a greater thrust to the booming sector. By laying all its focus on the infra industry, the government has ensured an overall economic overhaul,” he added,
Singhania believes that with this Budget, the government aims at fulfilling the dreams of a young, aspirational India with technologically-driven learning and skilling initiatives. It lays a strong foundation towards building a developed nation, which is the dream of every Indian.