What brands want from Union Budget 2019
As Finance Minister Nirmala Sithraman is set to present her maiden Union Budget on Friday, brand heads tell us more about their expectations from Budget 2019
Finance Minister Nirmala Sithraman will be presenting her maiden Union Budget on July 5th. The much-anticipated budget of the newly elected Narendra Modi government is said to focus on rural and social schemes. According to reports, the budget is also said to focus on the factors that will amplify domestic consumption and to help micro, small, and medium enterprises.
We caught up with few brand heads to know what their expectations are from Union Budget 2019
TS Kalyanaraman, Chairman & Managing Director, Kalyan Jewellers
We are hoping for a reduction in the import duty on gold from 10% to 4-5%. This would help buoy up positive business sentiments, and a cut in the duty structure will ultimately benefit the consumer. A step in this direction will also promote the import of gold through legalized channels resulting in increased revenue for the government.
We look forward to organized jewellery retail chains playing a more pro-active role in the Gold Monetization Scheme which would help the government reach its targets of mobilizing gold from consumers across the country.
Jewellery purchase through EMIs is another option that we would like the government to look into.
Arjun Ranga, Managing Director, Cycle Pure Agarbathies
Over 90% of India's workforce is currently unskilled and are directly employed within the FMCG sector. In order to promote employment and increase incomes, we hope the new budget will bring tax benefits for companies employing the rural and unskilled workforce. An overall reduction on corporate tax rates will prove to further promote and benefit the FMCG sector.
Higher allocations to improve and maintain transport infrastructure coupled with a reduction in tax on petroleum products will reduce the cost of logistics drastically. Low-cost finance for small traders will ensure higher liquidity in the FMCG sector.
Ashutosh Vaidya, CMO, Kurl-On
Speaking from an industry point of view, one of the largest correlation factors to the growth of the mattress industry is housing. The government should bring in more policies and schemes in the affordable housing sector. The deduction in housing loan interest should also be taken into consideration. Another need of the hour is a reduction in GST on coir products, currently, the GST on coir products is 18 per cent. We expect it to be slashed down to 8 per cent.
V K C Noushad, Managing Director, u4ic International Pvt Ltd
As a member of the Confederation of Indian Footwear Industries (CIFI), we look forward to support from government on following specific areas to help the Indian footwear manufacturers. Some of our demands are:
1. Extending 5 per cent tax structure for footwear with sale value up to Rs 2000 from the current Rs 1000, as represented by the Council for Leather Exports
2. Reduction in taxes on footwear components from the current 18 per cent to 5 per cent in line with an applicable tax on the end product
3. Under inverted tax structure, refund eligibility for input tax credit on input service have been excluded from the net input tax credit calculation. These need to be re-instated
4. Current refund procedure in GST is part manual and part online. This industry being predominantly under inverted tax structure, we would like to see the refund moving completely online so that MSMEs in the sector would get the much-needed relief with respect to working capital requirements
PC Musthafa, CEO and Co-founder, iD Fresh Food
My expectations from the Union Budget 2019-2020 includes:
1. Higher spending on organic framing
The upcoming budget needs to increase public expenditure on organic farming - which, in turn, will help with higher yields, better soil benefits and lower long-term cultivation costs. Not to forget, the proven ecological and health benefits. The government ought to invest in infrastructure like irrigation and seeds to increase farm productivity as well as incentivise investments in technology. The right ecosystem will inspire more startups to join hands with farmers to make organic farming truly successful in India.
2. Collaborating for sustainable food packaging
The government needs to look at innovative solutions for making environment-friendly packaging materials that are also commercially viable. The need of the hour is to reach out to businesses who can provide technical expertise and logistic support for finding a greener alternative to plastic. Collaboration is the key.
3. Investing in food processing infrastructure
The food processing industry in India is largely unorganised and lacks basic infrastructure in terms of storage and transportation. Given that the industry is one of the highest generators of employment, the budget needs to earmark more investments to build better infrastructure and improve the food processing value chain in India. Investing in projects that assist in preserving the agricultural produce through the year will help keep a check on volatile product prices – catering to the interests of farmers, traders, entrepreneurs, and consumers.
Mitesh Shah, Head - Finance, BookMyShow
The entertainment sector's growing importance in the government's mindshare in the interim budget 2019, by way of single window clearance for filmmakers in India, the abolishment of the foreign investment promotion board and strengthening of anti-piracy rules, has reflected the intent of this government towards the sector and we wholly welcome the changes. We expect the live entertainment sector to be next in line to receive favourable support in the upcoming budget, a move that will also boost allied sectors of tourism, hotel, and the travel industry.
We hope that the budget will formalise a well-crafted data policy in line with global standards taking into account consent, privacy, protection, ownership, access and usage of data for both individuals and companies, as also announce incentives for investments for data security. We expect the Finance Minister to devise an e-commerce policy that is equal for both domestic and foreign-funded players so as to create and uphold a level playing field.
The issue of angel tax has been a long-standing one and we expect the budget to accord complete clarity on the matter.
Mithun Appaiah, CEO, Innovative Foods Limited (IFL), Brand Sumeru
The new government must take steps and give importance to easing out taxation for the middle-income group, which forms the majority of the working population, by raising the tax exemption threshold. This will indirectly help in reducing the household spends, which will help in opening more opportunities for food brands like us. The government should focus on giving subsidy for exports business which in turn will help in opening new market opportunities for foods brands like ours to cater to global demand. This then helps to improve our GDP and leverage the country’s exchange rate.
Prashan Agarwal, CEO, Gaana
We are extremely positive regarding the newly appointed government's vision and efforts to give impetus to the OTT industry in India. Digital India is a move in the right direction that will further bolster the music streaming economy by enhancing accessibility to tier II and tier III markets. With a greater emphasis on Artificial Intelligence (AI) and lower data costs in the interim budget, this step in the right direction will nudge home-grown brands to launch disruptive products & services. Given the online user-base for music streaming is expected to reach 400 million by 2021, this potential influx of a wider set of internet users will encourage more advertisers to employ OTT platforms for audience segmentation & targeting to drive higher revenue.
Tarun Mehta, CEO, Co-Founder, Ather Energy
The Central government has been consistently supporting and promoting the adoption of electric vehicles and it has had a positive impact on the market. As the industry matures, it will need long term policy support and predictability, which will allow OEMs and ancillary players to make deep investments. We expect the budget this year to focus on 4 areas of concern, that will have an impact across the short to long term growth of the electric vehicle industry in India’.
As a manufacturer, we would like the Centre to review the current taxation framework applicable to raw materials and the final product. There is an inherent inverted duty structure as the GST input on raw material and other overheads are on average of 18% wherein the output is pegged at 12%. The proposed reduction of the GST on EVs to 5% will increase this delta. This structure results in significant working capital blockage. Even with the existing GST inverted duty refund framework in place, there is a working capital blockage on the overheads and capital investments. A comprehensive GST refund structure of electric vehicle manufacturers or a reduced GST liability on the raw material should be assessed for seamless cash flows in the long run.
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