Budget 2025 Boosts Consumption: FMCG Makers on Tax Relief & Rural Spending

New Delhi, Feb 1 (PTI) The proposed income tax relief for the middle class and increased investments for rural development will help to drive consumption and propel growth of the premium product market, leading FMCG and consumer goods makers said on budget proposals.

The measures announced by Finance Minister Nirmala Sitharaman in the Union Budget will not only alleviate the burden of inflation and rising living costs but also help stimulate overall consumption, the makers said.

“The Union Budget 2025-26 is a bold and forward-looking plan that places the middle class at its core while ensuring inclusive and sustainable growth across all sectors," said Marico MD & CEO Saugata Gupta.

For middle-class families, strategic focus on targeted tax relief and enhanced social security measures, will uplift household sentiments, boost disposable income and drive consumption, he added.

PepsiCo India & South Asia Chief Executive Officer Jagrut Kotecha said Union Budget 2025 is focused on an income-led economic revival that will provide relief to the middle-income group.

"The measures introduced should alleviate the burden of inflation and rising living costs, bringing much-needed relief to consumers and in turn help in stimulating overall consumption," said Kotecha.

Godrej Consumer Products Ltd Chief Financial Officer Aasif Malbari said Union Budget 2025 takes a balanced approach by strengthening rural infrastructure, manufacturing, and consumer spending, which are three critical pillars for the FMCG sector.

"The Budget lays a strong foundation for a more consumption-driven economy, creating significant growth opportunities for the FMCG industry," he said adding "Investments in rural development and job creation will boost economic activity and drive higher consumption, opening new opportunities for market expansion."

Additionally, tax reforms benefiting the middle class will increase disposable income, further fueling demand across essential and aspirational FMCG categories, Malbari added.

The Indian FMCG sector, from the last three quarters, has been witnessing a slow growth in the urban area on account of high food inflation, which in turn impacted the demand. The rural market has outpaced urban growth, reversing the trend during the pandemic, when villages saw slow demand.

Historically, rural demand has been rising twice the rate of urban areas but on a lower base, driven by over 800 million people whose purchase behaviour is mostly linked to farm output.

According to Deloitte India Partner & Consumer Industry Leader Anand Ramanathan, the budget will help spur both the rural and urban economy by encouraging private consumption while maintaining government capital expenditure.

"Reversing inverted duty structures, enhancing the ease of doing business and promoting exports in sectors such as textiles, food processing, toys, footwear and leather will help boost manufacturing and encourage private investment in consumption oriented sectors," he said.

Moreover, social security for gig workers, enhancing guarantee support for MSMEs, extending mudra loans to homestay providers and making credit more accessible for farmers will help broad base the consumption support beyond the formal sector to more unorganised parts of the economy.

RSH Global Co-founder and Chairman Sunil Agarwal said: "The proposed income tax reforms are poised to enhance disposable income, driving demand across the FMCG sector, including beauty and personal care."

IKEA India CEO Susanne Pulverer said many of the initiatives announced in the budget will help fuel the aspirations of many more people, including lower-income groups.

"The revision of tax slabs empowers the middle class - the heartbeat of our economy - boosting disposable income, acknowledging their invaluable contribution and fueling socio-economic growth," she said.

Leading airconditioner and appliances maker and Tata group firm Voltas said Budget 2025-26 will provide an impetus for growth across sectors.

Moreover, "the proposed taxation reforms will strengthen the purchasing power of the middle class, enhancing financial flexibility and driving consumer demand," said Voltas MD & CEO Pradeep Bakshi.

BSH Home Appliances India MD and CEO Saif Khan said the proposed tax relief for the middle class will boost disposable income, driving consumer demand across various sectors, including home appliances.

"This optimism will not only enhance consumer aspirations but also propel growth in the premium product market," he said.

Water purifier maker Kent RO said the revised income tax slab, with zero income tax liability for those with annual income up to Rs 12 lakh, will increase disposable income and drive consumption. He also welcomed the government's initiatives to boost exports, manufacturing, and MSME growth.

"The Export Support Mission and National Manufacturing Mission are significant steps towards furthering the Make in India vision. By facilitating easy access to export credit, cross-border factoring support, and tackling non-tariff measures, the government is addressing critical pain points for exporters," he said.