The retail market has made a comeback after the pandemic but is still struggling with inflation and the global recession. The sector has now pinned its hopes on Wednesday’s Union Budget and expect Finance Minister Nirmala Sitharaman to come up with announcements on helping the industry navigate through the manufacturing and pricing troubles.

According to Invest India, the Indian retail market is projected to touch $2 trillion by 2032 from $690 billion in 2021. It is currently the 4th largest retail market in the world and is expected to create 25 million new jobs by 2030. Given this, the sector, which involves food, ecommerce and brick and mortar retailers, want more focus on manufacturing and pricing.

Focus on Rural Markets

Rajesh Ramakrishnan, Managing Director, Perfetti Van Melle India, wants the budget to lay emphasis on rural markets and agriculture. “One of the key expectations from Union Budget 2023 would be to fuel growth in the rural markets through a slew of initiatives around increased stimulus packages to boost farm income and greater number of infrastructure projects. Adequate investment in infrastructure, agriculture and social sectors will drive the pace of growth in the coming quarters. A key task for the Budget 2023 would be to develop sustainable growth models for increasing rural income so that there is a heightened demand for consumer products leading to a virtuous growth cycle.”

GST Relaxation

As for Vidit Aatrey, Founder & CEO of Meesho, the expectation is that the Budget will focus on GST relaxation for MSMEs. "Budget 2023 gives our visionary government an opportunity to put our MSMEs in the fast lane, building on its proactive efforts to transform the small business economy. First, the government can bolster working capital for e-commerce suppliers by lowering GST on input services like logistics and facilitating refunds of accumulated input tax credit. Over April-November 2022, 2.9 lakh sellers on Meesho dealing in products that attract <18% GST saw input tax credit accumulation of Rs 265 crore.”

Aatrey further said that expediting the implementation of GST relaxation norms for small online businesses will allow millions of them to realize their full potential.

“Further, with the National Logistics Policy bringing down costs for the ecosystem and strengthening distribution networks, the government could leverage the unmatched reach of India Post and Indian Railways to help our MSMEs meet rising e-commerce demand from small towns and villages in a fast and reliable manner, thereby boosting their competitiveness," he added.

Satish NS, President, Haier Appliances India, also has GST relaxation on his mind. “The Union Budget 2023 will play an important role in bringing the white goods sector on track, amidst geopolitical uncertainties and rising inflation. Strategic actions to strengthen the manufacturing in India will be essential to maintain the current trajectory of steady economic growth in the country.  The PLI scheme should continue forward which will push ‘Make in India’ ahead. And as we move towards the summer season, we expect some relaxation in GST for air-conditioners from the upcoming Union Budget 2023.”

Attention to Branded Goods

The Budget is also expected to focus on the branded goods category. As per Suman Saha, CEO, Arrow, "The Union Budget 2023-24 comes at a very relevant time, as the nation needs the right set of incentives and support measures to accelerate its recovery. The retail sector is a versatile industry and has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players. This year’s budget must focus on policy alignment for the retail sector since the Indian consumer's purchasing power is increasing, and branded goods in categories like apparel, footwear, accessories and food.”

Support for MSMEs  

Speaking on the Make in India initiative playing a greater role for MSMEs, Lisa Suwal, CEO, Prasuma, said, “Undoubtedly, the government has given a huge boost to Make in India in the previous budget through the introduction of the PLI (Production Linked Incentive) Scheme. However, this only benefits the larger players leading to a bigger disparity between the large and the smaller players. Our government should know that real innovation is happening at the smaller companies, and thus should look at the MSME space as well to provide such schemes.”

“We request the government to look at us as a growing sector, and provide us with schemes accordingly else it becomes tough to compete with the larger players.” Suwal added.

Sharing the gem and jewellery industry’s perspective, Eshwar Surana, MD, Raj Diamonds, says the budget should bridge the gap between larger and smaller players. “Formulate policies that aim at bridging the gap between organised and unorganised players. The gem and jewellery industry is hopeful that the government will announce supporting measures and specific schemes for the industry in the forthcoming Budget as it holds huge potential to create jobs and increase exports year on year and become a major driver of economic growth. The need of the hour is to formulate policies and bring transparency that aim at bridging the gap between organised and unorganised players. We are also hoping for a further reduction in customs duty, which will regularize prices and in turn, boost customer demand.”

Boost for Infra

Ahmad Hushsham, Co-Founder, Yoho, wants the focus to be on infrastructure development too. “The Indian government is committed to promoting economic growth and development, and this focus has continued since the pandemic. We hope to see a budget that outlines a plan for increasing economic growth along with more investment in infrastructure and incentives for corporate capital expenditure.”

As per Hushsham, an important step in this direction would be simplifying the GST structure. “Currently, the GST rate on footwear with a sale price above Rs 1000 is 18% and the rate on footwear with a sale price below Rs 1000 is 12%, which is confusing. Additionally, in the past, GST was set at a rate of 5%. However, it has significantly increased over the past few years and is now at 12% and 18%. This amidst increased cost of raw materials is hurting the industry. Reducing the GST rate and having a uniform rate on all footwear would lead to lower prices and potentially increase consumer demand.”

Another way to support growth and development would be to encourage the local production of footwear raw materials, components, co-polymers, moulds, and machinery at competitive prices under the “Make in India” initiative. This could boost India’s export ambitions and create employment, leading to lower overall prices and improving consumer sentiment,” he added.

Akshay Varma, Co-founder, Beco, highlighted the need to talk about sustainable goods. “With the latest budget, there are high expectations for meaningful provisions to foster a greener start-up economy, and this could be achieved through policy incentives that are conducive to sustainable business models, increased R&D support as well as technical upliftment for innovation in the green-goods space. As India enters its decade of sustainability, certain funding and policies to tackle tariff rate challenges and project execution will definitely boost the consumer sentiment."

While TV continues to dominate the media landscape in India, like much of the rest of the world, it should come as no surprise that digital is making swift inroads. As per industry reports in 2021, India's digital media market was valued at over Rs 30,000 crore with estimates projecting it to spike to Rs 53,700 crore by 2024.

And with the general elections coming around the same year, the 2023 Union Budget, set to be released this Wednesday, is the last boost to the economic policy of the government, as it aims for a third consecutive term in power, with industry watchers paying close attention to plans for emerging tech in the digital space.

Keerthi R Kumar, Business Head-South, FoxyMoron, notes that the Indian government has already taken several measures to promote digital media and technology, such as the introduction of the Digital Media Ethics Code Rules 2021, and the Digital India initiative.

He says, “To further promote digital media and technology, especially blockchain and its applications, in 2023, the Indian government could consider the following measures: launch of the digital rupee (the digital rupee is the central bank's digital currency, and it is widely accepted as a safer alternative to cryptocurrencies); relax cryptocurrency regulations; and invest in research and development.

Kumar adds that the Indian government could consider providing tax breaks and subsidies to companies that invest in blockchain technology as this would help promote the use of blockchain technology in India even further.

The budget proposal defines virtual digital assets as "any information, code, number, or token (that is not Indian currency or foreign currency)”. According to Kumar to encourage the use of blockchain technology in India, the Indian government may consider relaxing cryptocurrency regulations.

Amer Ahmad, Director of Technology, Blink Digital, asserts that regulation and clarity are all that is needed from the government.

“India is amongst one of the biggest adopters of web3. Despite this, we have no clear regulations about crypto and the web3 space. This means that even when we look to create campaigns for brands involving activities with NFTs or the metaverse, this lack of regulatory clarity makes brands highly apprehensive and unwilling to enter the space,” Ahmad said, adding, “More so, the current taxation and TDS regulations are hugely detrimental to the space. If we wish to become a web3 hub and allow for it to flourish, the government needs to come out with clear and constructive regulations and move away from its current flip-flop stance.”

“We have entered this new year with high hopes and substantial growth expectations of blockchain applications for crypto and web3 with the rollout of 5G along with the booming metaverse. Our country will strengthen further with this developing industry with more streamlined regulatory measures in the play. Well-defined crypto laws will provide clarity and encouragement to brands and agencies to explore further,” noted Mitesh Kothari, Co-founder and CCO, White Rivers Media.

“The advanced blockchain technology also comes with the sizable potential for the public sector applications like digital payments, land registrations, notarization, supply chain traceability, healthcare, education, data management, auditing, taxation, voting, etc. It would also benefit if we can achieve international collaboration to regulate laws surrounding crypto with an evaluation of the risks and benefits,” Kothari added.

The potential of blockchain comes into sharper focus upon remembering that the Modi government’s roadmap to India becoming a five trillion-dollar economy by the end of the decade is predicated on, among other things, digital assets created and exported to the world from within the country.

Vivek Kumar Anand, Director – Business and Innovation, DViO Digital, also believes that blockchain technology has a huge potential to not only bring efficiencies to various government initiatives but also create massive employment opportunities and position itself as a global leader to attract businesses, entrepreneurs and talent across the world, enabling economic growth of the country.

According to him, there are three essential steps that the government can take and include in the coming budget. The first is the adaptability of blockchain in its various programs, such as ownership transfer records of the vehicles to enable the incorruptible, decentralized and transparent log, taxation, and unified health IDs to encrypt and exchange patient data effectively.

The second is industry creation, with Anand noting, “Given the growth we have seen in digital and IT-related services, where we are among the leading countries in this segment, it makes sense for India to take charge and lead the blockchain revolution by providing an ecosystem, infrastructure and policies that support this industry. Thus, making it a haven for blockchain entrepreneurs worldwide will eventually result in employment and economic growth.”

“And third is talent creation, given that there is going to be a surge in demand for talent having expertise in blockchain, AI, and meta, and it is an opportunity for India to park a budget to support the training and education in this domain in terms of the scholarship or even as government-backed skill-based programmes. It will help create a talent pool that is not only employable but also helps take our education system to the next level and position us as a global leader.”

The Digital India initiative of the government includes a programme to encourage collaboration between industry players and academic institutions in the development of innovative solutions. Furthermore, the government has issued the National Digital Communications Policy 2018 to encourage collaboration between industry and academia in the development of digital communications technologies. To promote the use of blockchain technology in the country, the government has already launched the National Blockchain Framework.

Rajagopal Menon, Vice President, WazirX, suggests the government can establish a blockchain mission that brings together industry leaders, academics, and government officials to share knowledge, collaborate on research projects, and improve governance quality.

“The government has the ability to create a regulatory environment that promotes the growth of digital media and technology. For example, the Reserve Bank of India’s (RBI) guidelines for the use of digital payments and mobile wallets have aided in the growth of these services in the country. The government, for example, could issue guidelines for the use of blockchain technology in financial services, supply chain management, and land registration,” he says, adding that other measures could (and should) include tax breaks, incubation and acceleration programs, and of course more R&D.

Bharat Patel, Chairman and Director, Yudiz Solutions Ltd, believes that a major priority for the central government should be establishing a task force for cybersecurity and increasing spending in that area. “While recognizing the growth of lucrative sectors such as the metaverse, gaming, and blockchain, we also need to focus on skill development, start with basics, institute infrastructures, and keep exploring the sectors broadly. The AVGC (Animation, Visual Effects, Gaming, Comics) sector should get a tremendous boost as there is huge scope.”

He adds that the country has the expertise and talent to become proficient in the game development category and publish those games on a global level. “The concepts and ideas should be inspired by our mythological stories like the Amar Chitra Katha, the Mahabharata and the Ramayana. We have talent, concepts, and capability to utilize advanced technologies, it just needs a little push from the government bodies to acknowledge it and take necessary decisions,” Patel noted.

Kantar has released findings from its second edition of India Union Budget survey. This survey maps consumer sentiments and expectations from the Union Budget 2023, just ahead of its unveiling on Feb 1. 

With no clear end in sight of the Russia-Ukraine war, an expected slowdown in Europe and the US, and with 9 Indian states heading into assembly polls in 2023, the mood of the nation is one of cautious optimism. 

A majority (55%) of those who took part in the survey want continued focus on healthcare in this budget like last year’s. This number however is significantly lower than last year’s (66%).

At a macroeconomic level, most have a positive outlook: 50% believe that the Indian economy will grow in 2023 as against 31% who feel there will be a slowdown. Non-metros at 54% are more optimistic as compared to metros. 

55% believe that Sensex will hover around the 70,000 mark by year-end. A sizeable 40% expect it to potentially cross 70,000 as well. This is more amongst the affluent (58%) and older 36-55yr olds (54%).

However, the global economic slowdown and a potential resurgence of COVID are key areas of worry for Indians. 3 out of 4 people are worried about the rising inflation and want the government to introduce decisive measures to tackle the same. 

Every 1 in 4 Indian is also concerned about the threat of job layoff. This is relatively higher in the affluent (32%), older 36-55 year-olds (30%) and salaried classes (30%).

Consumers expect an announcement in policy changes with respect to income tax: Increasing basic income tax exemption limit (from current Rs 2.5 lakh) is the most common expectation among consumers followed by the increase in the threshold limit of the highest tax slab rate of 30%. Two-thirds also want to see an increase in the tax rebate for investments under 80C. 

Commenting on this year’s survey, Deepender Rana, Executive Managing Director - South Asia, Insights Division, Kantar, said: “Indians are largely positive about the macroeconomic performance of the country in 2023. Belief in the India growth story amongst older and affluent class is quite strong. However, the global economic slowdown might play spoilsport. Most expect the government to play the role of a protector and take stringent measures to curb inflation to prevent the economy from slipping into a recession, as it directly impacts their household budget as well as their job prospects. As always, consumers are looking for some sort of relief in the income tax regulations and middle-class friendly budget overall.”