By Anurag Sharma
With the impending announcement of the 2022 budget by Finance Minister Nirmala Sitharaman, consultancy and tax audit and consultancy firms expect the coverage of certain benefits to foster the growth of the consumer goods and commercial sector Retail.
Over the past two years, economic activities have experienced a slowdown due to Covid which has affected consumer demand and supply. Over the past year, many consumer goods and retail companies have begun to weather the disruption by managing shifts in demand to drive growth. These efforts have shown good signs of recovery in 2021, as observed by the industry.
But with a sudden increase in COVID-19 cases recently, the growth momentum of this industry has become one of the major concerns. The Union Budget 2022 has great hope and implications for lifting the sector.
Sharing the pre-budget expectations for the retail and consumer packaged goods sector, Abheek Singhi, Managing Director and Senior Partner at Boston Consulting Group, said, “I hope Budget 2022 will kick-start this wheel of inertia to stimulate consumption, increase utilization and restart the investment cycle.While disposable income and job creation are prerequisites for boosting retail consumption, consumer confidence, access to credit and markets are important enablers.”
From the next budget, Singhi expects a move towards greater formalization in the retail, agribusiness and hospitality sectors – which have a large employment base and potential. He hopes the budget will encourage entrepreneurship by emphasizing the ease of starting a business in all sectors. He also believes that revising the income tax thresholds and slabs can help increase the disposable incomes of real central India.
Naveen Malpani, Partner and Consumer Sector Leader of Grant Thornton Bharat, said of the pre-budget expectations: “The retail sector is hoping for the implementation of a national retail policy and an efficient tax refund process to avoid credit lock-in With the right government support, private sector players are ready to invest more in building efficient supply chain infrastructure as well as innovation technology to improve global competitiveness.
According to a recent pre-budget survey of the consumer and retail sector by Grant Thornton Bharat, a global tax audit and advisory firm, 54% of respondents want more skills development initiatives are needed to make MSMEs globally competitive.
Further, it showed, regarding Atmanirbhar Bharat and to promote the growth of domestic manufacturing, 41% of respondents hope for rationalization of basic tariffs on certain imports, after concluding the free trade agreement (ALE) benefits into account.
He also suggested the government consider rolling out production-related incentives (IPL) to new sectors, including toy manufacturing, footwear, personal care and cosmetics. Nearly half of survey respondents expressed their views on the GST Act that they needed more clarity on the input tax credit, followed by supply and value of the offer.
The survey also indicates that greater liquidity in the hands of the consumer has a direct positive impact on the consumer and retail sector, as it increases the consumer’s propensity to spend.
