Pre-budget Expectations of Fmcg Sector

8/2/2019 Pre-budget Expectations of Fmcg Sector

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EXPECTATIONS OF FMCG

SECTORSubmitted To: Prof. Rasananda Panda

Prepared By:

Milan Dave (A 14)

Sweety Hirpara (A 19)

Yatindra Jha (A 23)Manisha Ramrakhyani(A

35)


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What are Fast MovingConsumer Goods (FMCG)?

Products which have a quick turnover, andrelatively low cost are known as Fast MovingConsumer Goods (FMCG).

Examples are toiletries, soap, cosmetics,tooth cleaning products, shaving productsand detergents.

A subset of FMCGs are Fast MovingConsumer Electronics which includeinnovative electronic products such as mobilephones, MP3 players, digital cameras, GPSSystems and Laptops.


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Top 10 FMCG Companies. . .. Proctor & Gamble: Nestl Anheuser-Busch Unilever Coca-Cola PepsiCo Kraft Foods

Philip Morris International British American Tobacco Nokia


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FMCG Growth Story

FMCG sector has been able to maintainthe growth momentum till date.

The continued off take of FMCG

products was driven by strong ruraldemand as well as rising modern tradeand preference of premium products.

Implementation of GST and revision oftax slabs will provide a boost to risingdemand and better pricing for the sector.


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Measures Taken in FiscalStimulus Packages and

Budget 2011-12 Emphasis on Agriculture and rural development leading

to higher rural income expected to drive ruralconsumption.

Income tax exemption slab for general tax payersraised from Rs 1.6 lacs p.a. to 1.8 lacs p.a. Positivefor all FMCG companies.

No hike in excise duty on cigarettes Positive for ITC

No hike in standard rate of excise duty Positive for allFMCG companies


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Budget

Expectations ofFMCG


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FICCI seeks reduction in VAT

FICCI believes that biscuits should be treated as meritgoods and therefore be secured in a more rationalmanner. It is expected that the budget 2012-13exempts biscuits from VAT, or at least as lower as12-15% the rate of VAT on them.

Product of mass consumption and sold in largerquantities in the urban as well as rural areas of thecountry.

Being a high shelf life and a highly price sensitive

product, it is seen in the past that higher tax or a higherprice has decreased their consumption.

More than 3.5 million people have a direct or indirectassociation with the biscuit industry in India.


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FICCI expects the budget 2012-2013 to putpackaged drinking water, a common man'sproduct, in the nil category.

Adoption of macro view instead of levying exciseduties on products.

it is expected that the excise duty be reduced in acalibrated manner in two phases: it should bebrought down to 4% in the first phase and reduced to0 in the second


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Excise Duty

It is also expected that the budget looks into thesoyprocessed food products sector.

Currently, the excise duty being levied on these

products, whose nutritional value is high, is 8-12%which is severely affecting the domesticconsumption of these products.

The World Health Organization (WHO) hasrecommended that the consumption of soyprocessed food products be accelerated, which willonly happen when the excise duty on them is done

away totally.


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Continued. . . .

There is expectation of 12-15% rise in exciseduties on cigarettes. (However, this will have noeffect on ITC, the largest cigarette manufacturer, asthe company has already increased cigarette

prices across various brands significantly inanticipation of rise in duty)


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Removal of Corporate ServiceTax Industry also expects the Corporate Service Tax

to be removed. (It increases the cost of products,thereby threatening sale and margins, and anushering in of the Goods and Services Tax)


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Consistency in Fiscal Policy

The FMCG industry's key expectations from theBudget include a consistency in fiscal policy toenable companies to plan for medium term andthereby aid new investments; and measures tomanage fiscal deficit by judicious spending," says

Kimsuka Narsimhan, Chief Financial Officer,Pepsico India. ((it leverages its expertise inproduction efficiencies in order to keep input costsin control and offset the impact of inflation andincreased taxation on the consumer))

Budgetary measures should also sustainconcessions for Agro based industries toincentivize investments, she says.


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Direct Taxes Code (DTC) Bill

While last year's Budget brought some cheerto the Rs 1,30,000 crore fast movingconsumer goods industry(FMCG) in the formof an upward revision in the income tax

exemption limit and a reduction in corporate taxsurcharge, members of the sector this year tooexpect more disposable income in the hands ofconsumers with a restructuring of income taxslabs in line with the Direct Taxes Code (DTC)

Bill.

DTC is aimed at simplifying tax laws andlowering tax rates.


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Continued. . . .

Increase in exemption limit

Medical reimbursement

Abolish surcharge & education cess

Exemption on LTA(Leave TravelAllowance)

Capital gain from property sale to be

added in taxable income


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Hike Duties on Edible oil imports

Import of refined palm oil fromMalasiya and Indonesia. (About 50%of domestic demand)

Existing 7.5% duties on Import ofrefined edible oils

Proposed to hike up to 16.5% to savedomestic industries from closing down


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GST need of the hour

An irregular and restrictive tax regime has beengiving major FMCG and retail businesses a ratherhard time and that's the biggest issue they want thefinance minister to address in this year's budget.

FMCG sector interested in boosting sales volumeby decreasing price but Inflation is so high that it isdriving price of the goods higher.

Upon implication of GST, it will lead to removeother levies like Octroi, Central sales tax, valueadded tax making goods cheaper.


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Continued . . . .

Bijou Kurien, CEO, Reliance Retail says, "Becauseof the delay in the implementation of the GST,several states have been arbitrarily changing thepreviously agreed upon standard rates for VAT and

have been imposing entry taxes etc.

The National Council of Applied EconomicResearch has said that implementing GST would

boost India's one trillion-dollar-plus economybetween 0.9% and 1.7%, over and above nationalgrowth.


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Works Cited:

Websites:http://www.moneycontrol.com/budget2012/budget-

impact//budget2012/budget-impact/fmcg.html, 8th March,2012

http://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-duty, 6th March, 2012

http://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-

ficcci/articleshow/11926370.cms, 8

th

March, 2012
http://www.moneycontrol.com/budget2012/budget-impact/budget2012/budget-impact/fmcg.htmlhttp://www.moneycontrol.com/budget2012/budget-impact/budget2012/budget-impact/fmcg.htmlhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://economictimes.indiatimes.com/news/news-by-industry/cons-products/tobacco/budget-2012-maintain-tax-stability-in-excise-rates-for-cigarette/tobacco-industry-says-ficcci/articleshow/11926370.cmshttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://articles.economictimes.indiatimes.com/2012-02-16/news/31066805_1_biscuit-industry-food-products-excise-dutyhttp://www.moneycontrol.com/budget2012/budget-impact/budget2012/budget-impact/fmcg.htmlhttp://www.moneycontrol.com/budget2012/budget-impact/budget2012/budget-impact/fmcg.htmlhttp://www.moneycontrol.com/budget2012/budget-impact/budget2012/budget-impact/fmcg.htmlhttp://www.moneycontrol.com/budget2012/budget-impact/budget2012/budget-impact/fmcg.htmlhttp://www.moneycontrol.com/budget2012/budget-impact/budget2012/budget-impact/fmcg.html


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Documents

Pre-budget Expectations of Fmcg Sector