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Untouched FMCG to bank on Centre’s rural focus

09-July-2004
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Untouched FMCG to bank on Centre’s rural focus

By and large the FMCG sector has remained in the corner as far as the Budget 2004-05 is concerned. An increase of five per cent in the import duty on refined edible oil is the only move that will in a way affect the FMCG companies operating in India. On the flip side though, the growth-hungry FMCG sector, once again, has been let-down as their demands have not been met in the Budget.

“We had asked for 8 per cent excise duty on consumer care products besides total exemption on ayurvedic formulations which has not happened,” Dabur India CEO Sunil Duggal said.

Godrej Consumer Products (GCPL) executive director & president HK Press concurred: “Every sector is hopeful about some relief in terms of lesser indirect taxes and on that front FMCG faces some dissappointment.”

However, as said by Godrej Group chairman, Adi Godrej, the thrust on rural development and employment will turn out to be positive for the FMCG sector. Mr Godrej feels that the results of the same will be visible soon. Johnson & Johnson managing director NK Ambwani agrees that although the Budget does not declare anything specific about FMCG, the focus on agriculture and employment will help the sector in the long-run. Mr Ambwani added that the implementation of value added tax (VAT) from next year will help the logistics operations, which are crucial for the FMCG sector.

Mr Godrej added that the increase in the import duty on refined palm oil from 70 per cent to 75 per cent will not affect the business of GCPL, while the foods business of Godrej Industries will benefit, being a domestic company selling edible oil.

Leading FMCG companies like Hindustan Lever Ltd (HLL) derive a huge chunk of their revenues from the rural areas. Clearly, if the plans revealed by the finance minister for the country cousins are implemented in the right spirit, these companies will stand to gain.

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