A slowdown in consumer spending and rising inflation have become big concerns for FMCG companies. This is getting reflected in the prices of products and services without a matching rise in disposable income.
Therefore, the industry expects the government to increase the disposable income at the hands of individuals in the Union Budget 2013. This move will prompt them to spend more on discretionary consumer products.
An increase in excise duty will pose a challenge for the industry as it may be tough for consumer goods companies to pass on the tax burden to the consumers considering the current economic environment. Moreover, if the tax burden is passed onto the consumer, it will prove to be inflationary.
Meanwhile, the India Electronics and Semiconductor Association (IESA) said that the Budget should focus on building the domestic electronics industry, which is a very important item for national agenda. Therefore, IESA has asked for a speedy implementation of GST and rationalised indirect tax structure of 12% GST (8% Excise + 4% VAT) on electronics manufacturing value chain.
Abinash Verma, DG, Indian Sugar Mills Association had earlier remarked that the government seems to be inclined to follow the recommendations of the expert panel headed by Prime Minister's Economic Advisor Council Chairman C Rangarajan and is expected to decontrol sugar sector before the Budget.