Interim Budget 2024 and industry expectations

Interim Budget 2024 and industry expectations
Photo - Ministry of Finance

The upcoming Interim Union Budget for the year 2024 follows the trend of its predecessors by embracing a paperless format for the fourth consecutive time. Scheduled to be presented on 1st February 2024, this interim budget continues the commitment to digital accessibility and transparency.

Following the Union Finance Minister's Budget Speech in Parliament on 1st February, 2024, the Budget documents will promptly become available on the "Union Budget Mobile App", ensuring prompt access to vital fiscal information. This user-friendly application has been designed to facilitate convenient access to budgetary information for Members of Parliament (MPs) and the general public. It is bilingual, available in both English and Hindi, and compatible with Android and iOS platforms. For those preferring an alternative download method, the App can also be obtained from the Union Budget Web Portal at www.indiabudget.gov.in.

Food and beverage processing industry leaders across India have expressed their wish lists seeking favorable policies to drive growth and address specific challenges within their domains in the forthcoming budget 2024-25.

Saurabh Saith, chief executive officer, Orion India, says, "As we approach the upcoming Interim budget 2024, we see the positive strides made by the government in managing the costs of essential raw materials such as oil, chocolate, sugar, and wheat. The control on commodity prices is a commendable step that fosters stability in the FMCG food market. In particular, I would like to bring back government’s focus on PLI in food processing sector, this will help give encouragement to food companies like us to invest more Capex and plan more greenfield projects. This initiative is pivotal for fostering growth and innovation within the FMCG industry.

Rationalizing IT slabs to give more disposable income in hand and hence more consumption by the large middle class may help not just Food Companies, FMCG but almost all consumption led industries will benefit. We look forward to a budget that not only addresses current challenges but also propels the FMCG sector towards sustained growth and facilitates new investment.”

Ashish Pradhan, president, Siegwerk Asia, says, "The current Union Budget necessitates a mindful approach to taxation within the FMCG industry. Despite the current GST rates of 18% or 12% on FMCG items, I hope for a streamlined reduction of all FMCG commodities to 5%, designating them as essential commodities. Such a measure opens up new potential for the whole FMCG value chain and promises a much-needed impetus for industry stakeholders."

"Furthermore, there is a need for tax exemptions for companies engaged in Research and Development (R&D) specifically focused on enhancing customer health and safety. This strategic incentive has the potential to significantly bolster advancements in these vital domains. Finally, I hope the Union Budget is well-aligned with the hues of sustainability and green growth."

Pankaj Poddar, group chief executive officer, Cosmo First, says, "India’s packaging industry holds substantial potential to transition into a net exporter. Realizing this potential necessitates crucial government support, and we anticipate pertinent announcements in Budget 2024. Considering the valuable contributions and opportunities the sector presents to the market, the implementation of Production-Linked Incentive (PLI) benefits in areas where India is a net importer—such as capacitor films, battery separator films, PEN films, etc.—can serve as a transformative force for the industry. Additionally, as India progresses towards the shared objective of Atmanirbhar Bharat, extending the sunset clause on lower tax benefits for new manufacturing entities by two years will incentivize capital expenditure, fostering confidence within the industry."

"Moreover, the industry urgently requires the establishment of a plastic university equipped with state-of-the-art infrastructure. This will support in creating and bringing fresh talent for the industry, and also attract plastic machinery manufacturers to establish their operations in India. However, challenges persist in the plastic processing industry and with Extended Producer Responsibility (EPR), acting as a road block. These challenges can be effectively addressed by establishing waste collection, segregation, and recycling infrastructure across all towns, cities, and villages. We anticipate the government’s proactive approach in addressing these issues and providing essential support to the industry in the upcoming budget.”

Aditya Krishna, head of Sales and Marketing, McCain Retail, shares, "We are hopeful that the government prioritizes initiatives aimed at increasing disposable income, thereby empowering consumers to engage in discretionary spending, which in turn will stimulate demand across sectors. Incentivizing performance-linked schemes for food processing companies would further promote innovation in the industry which is a crucial aspect. In addition, we expect the government to consider providing tax rebates for the development of frozen food infrastructure. These measures would not only encourage investment in infrastructure but also foster the growth of the frozen food sector by facilitating efficient storage and distribution processes."

Shammi Agarwal, director, Pansari Group, says, “Our expectation from the upcoming 2024 budget is to see a transformative fiscal landscape that propels growth and innovation. The prospect of an elevated income tax slab emerges as a beacon of optimism that promises a conducive environment for businesses. This anticipated shift will act as a catalyst and infuse renewed vigour into the FMCG sector, encouraging resilience, and fueling expansion. Apart from this, we also want the government to allocate more grants to support the FMCG industry. The increased budget allocation can be seen as a reflection of the government's proactive approach to boosting Indian industries. Such financial injections are not merely monetary infusions but proof of the government's proactive commitment to nurturing indigenous industries. A heightened budgetary commitment becomes the lifeblood of innovation which will boost the startup ecosystem and provide the much-needed impetus for research and development (R&D) endeavors within the FMCG industry.”

Sheetal Bhalerao, chairperson and managing director of Wardwizard Foods and Beverages, shares, “The industry seeks that the upcoming budget will set the ground for shaping the macro-level landscape of the food and beverages sector, both domestically and in terms of export. We foresee a great potential for growth and expansion of Indian brands in global markets. It would be a great indicator to the industry if the interim budget gives concrete directions benefiting the Indian F&B sector with regards to trade policies, export incentives, and infrastructure development. In particular, we are hopeful that these positive measures will drive ready-to-eat and frozen food segments. The budget's support for these segments could further bolster our position in the global market and drive increased export opportunities. We are optimistic that the Government will recognize the significance of the food and beverages sector and introduce measures that will propel the industry towards greater heights.”

Manish Aggarwal, director, Bikano, Bikanervala Foods, says, "As we eagerly await the Union Budget for 2024-25, the FMCG industry in India is hopeful for a positive change after a tough 2023. Despite facing challenges in 2023, the sector expects to see strong growth next year, driven by increased demand in rural areas, favorable prices for raw materials, and the likelihood of a good monsoon.

“We are eagerly anticipating the government's focus on agriculture in the upcoming budget. This holds significance for the growth of rural areas, the potential for increased income in rural areas, and overall business expansion. The possibility of additional funding for the Agriculture Accelerator Fund aligns with our goal of utilizing new technology to improve farming practices, particularly enhancing storage facilities. This could contribute to better storage solutions, benefiting farmers and the overall FMCG sector.

“Furthermore, we strongly encourage the government to invest adequately in boosting the rural economy. By enhancing the conditions for rural jobs and increasing government spending, we can stimulate greater demand in rural areas. This effect can be amplified by directing more funds towards improving rural infrastructure and implementing Product-Linked Incentive (PLI) schemes. These measures would not only contribute to the growth of rural areas but also elevate productivity in the hinterlands.

“As we eagerly anticipate potential government efforts to uplift the FMCG industry, we also foresee a heightened focus of technology integration. This integration is expected to propel the FMCG sector forward by creating innovative approaches to connect with consumers and streamline operations."

Madhuri Ganadinni, co-founder, The Tea Planet, shares, "We at The Tea Planet, expect a budget that recognizes the important role that startups have played in reshaping India's economy, and local manufacturers, especially in the food sector. Approximately 80–90% of consumers now prefer to purchase from local manufacturers rather than importers, which is an amazing shift in consumer behavior. A notable program that has improved the status of domestic manufacturing is the Production-Linked Incentive Scheme (PLIS). This program aims to increase the competitiveness of local businesses and manufacturing capabilities. For food manufacturing companies like us, such incentives can be beneficial in fostering growth, encouraging investment in technology, and improving overall efficiency. Incentives such as tax reductions, simplified regulations, and financial support can play an important role in encouraging entrepreneurs in the food manufacturing sector to innovate and generate revenue. A budget that actively promotes these aspects will not only benefit individual startups but also contribute to the creation of a strong and sustainable ecosystem for the entire industry."

Anuj Kumbhat, co-founder and chief executive officer, WRMS, says, "Investing in the future of Indian agriculture is paramount for sustainable economic growth. The Agritech sector, being the beacon of innovation, has witnessed significant strides in 2023. To propel this momentum, we urge the government to allocate substantial funds in the upcoming budget 2024-25, focusing on the comprehensive development of the Agritech ecosystem. By prioritizing technological advancements and enhancing agriculture infrastructure, we can unlock the full potential of our second-largest contributor to the economy. Schemes promoting technology adoption, resource efficiency, reduced input costs, increased agricultural yields, and better forward-backward linkages are imperative. Additionally, subsidizing crop insurance, offering financial support for the acquisition of drones and accessories, and providing a conducive environment for startups through R&D, tax benefits, and automation incentives will make agriculture a resilient, tech-led powerhouse. Let this budget be a testament to our commitment to transform the agricultural landscape, ensuring prosperity for farmers and sustainable economic growth for the nation."

Piyush Kakkad, chief financial officer of Rebel Foods, emphasizes the context of budgetary allocations, "With Budget 2024 on the horizon, we are hopeful for strategic initiatives that will bolster the F&B sector, particularly in areas of digital innovation, ease of doing business and GST input credit restoration. The Indian government's progressive approach towards digitalization and entrepreneurship, as seen in recent budgets, gives us confidence. We anticipate policies that will further enhance operational efficiencies, and promote sustainability and tech integration."

Tushar Bhandari, whole time director, Associated Alcohols & Breweries, says, "The industry is brimming with potential, fueled by a booming premium segment (8-10% growth) and rising disposable incomes. However, navigating this growth responsibly requires a delicate touch. We yearn for a gradual reduction in excise duties, currently exceeding 50% of retail price, to stimulate volume and curb illicit trade. The alcobev industry should move to GST from state excise duties. Harmonizing state regulations and streamlining permits will unlock operational efficiency. E-commerce, a Rs 5,000 crore giant with 15-20% growth potential, needs a clearer regulatory framework to flourish."

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