Indian Retail Sector Anticipates Budget Measures For Growth And Resilience

At the precipice of a significant shift in India's consumer industry, poised to secure its position as the world's third-largest market by 2027, leaders within the retail sector are eagerly anticipating the unveiling of the Interim Union Budget for the fiscal year 2024-25. 

The sector, recognised as a global retail powerhouse, is expected to reach a substantial USD 1.41 trillion by 2026, driven by a population of over 900 million internet users, a factor set to boost e-commerce and retail activities. 

In the face of recent challenges posed by high inflation, the forthcoming budget holds the promise of shaping policies and reforms to reinvigorate consumer sentiment, foster growth, and fortify India's retail landscape.

Need To Reinvigorate Consumer Sentiments

Samir K Modi, Managing Director of Modi Enterprises, highlights the need for budgetary measures that will reinvigorate consumer sentiment and spending, given the recent challenges posed by high inflation.

“The Union Budget for FY 24-25 should focus on generating demand and spurring consumption by offering benefits or concessions to the retail and FMCG sectors to boost overall consumer sentiment. Additionally, the other big reform would be to permit 100 per cent FDI in multi-brand retail for goods manufactured in India,” says Modi. 

He goes on to add, “This can benefit both traditional and modern retailers, fostering growth and innovation across the sector. Another boost could come about by allocating substantial investments in ONDC (Open Network for Digital Commerce) and digital infrastructure to fast-forward the growth of e-commerce and the digital economy. Such measures could work towards creating a unified national policy for retail whereby traditional and modern retailers can operate harmoniously, driving greater growth in the industry.” 

Need For Investments In Research, Infrastructure

Vipin Vijay, CEO of AVP Ayurveda, acknowledges the government's commendable efforts in integrating Ayurveda into the national health framework. Anticipates continued support for the National Ayush Mission and emphasises the need for investments in research, infrastructure, and educational initiatives to elevate Ayurveda's role in healthcare.

“The preceding Budget of 2023-24 significantly propelled the AYUSH systems forward. Noteworthy was the increased support for the National Ayush Mission (NAM), with a substantial 50 per cent rise from Rs. 800 crores to Rs. 1200 crores. NAM's focus on delivering cost-effective services through upgraded hospitals, Health & Wellness Centers, and strategic initiatives has been pivotal,” comments Vijay. 

He adds, “The Central government's proactive stance in fostering research and medical facilities has been commendable as well. The upcoming budget presents as a golden opportunity to fortify our dedication and usher in a healthier and more resilient future. By investing in research, infrastructure and educational initiatives, we can elevate Ayurveda to new heights of self-reliance and resilience, recognizing it as a cornerstone of our healthcare system.”

Incentives For Exports, Cost Effective Energy Solutions

Deepak Agarwal, Director of Clay Craft, seeks government support for Indian manufacturing in the ceramic tableware industry, emphasising incentives for exports, cost-effective energy solutions, and policies supporting skill development tailored to the ceramic and handicraft sectors.

“In the past fiscal year, the ceramic tableware industry experienced robust 20 per cent year-on-year growth. The industry, labour-intensive and reliant on traditional skills, requires incentives for exports and volume trades. Access to cost-effective energy solutions, like affordable natural gas, is vital for growth. We also anticipate policies supporting skill development tailored to the ceramic and handicraft sectors. To achieve Clay Craft's long-term vision of 'Made in India for the World’, we urge government backing through cluster development, effective skill programs, and subsidies for greenfield projects. Incentives for new manufacturing setups and volume production will drive our industry toward global excellence."

Economic Growth In Online And Retail Verticals

Gunjan Jindal Poddar, Founder of Amala Earth, highlights the growth of the e-commerce market and expresses optimism for economic growth in both online and retail verticals in the upcoming financial year.

“As a part of India's thriving economy, the e-commerce market is growing leaps and bounds and Amala Earth, our sustainable marketplace is proud to curate over 80,000 products under the aegis of over 800 local, sustainable, artisanal, natural and eco-friendly brands. This year is particularly important for us as we foray into the retail space and strive to create a unique experiential space for our discerning customers. Looking forward to a robust economic growth for both online and retail verticals in the next financial year,” says Poddar. 

Infrastructure Boost To Ensure Competitive Pricing 

Suvankar Sen, MD & CEO of Senco Gold and Diamonds, advocates for an infrastructure boost to ensure competitive pricing of raw materials, particularly gold. Calls for support in skill development, machinery procurement, and special finance to help Indian brands expand globally.

“While we have the inherent ability to manufacture for the world, the Budget needs to ensure a continuous focus on skill development. Artisans need to update themselves with the international standards of manufacturing. And if any machinery is procured, like the way we have been buying in SEZs, in which we get certain duty benefits, we should be able to import such machinery at lower duties and get government support and subsidies. Budget measures will thus ensure India’s capacity of manufacturing is fully utilised even  during the lean seasons of the global market demand,” says Sen.

Sen further remarks that the budget can also look into providing special finance to help Indian brands and manufacturers to establish businesses outside. “That would help further to take the brand ‘Made in India’ to the global stage. Finally, being one of the largest exporters of gems and jewellery, the industry is contributing to a major portion of the country’s total foreign exchange reserves. If the Budget can support manufacturers in terms of cost of capital or capex, then that will play a big role and provide a boost for various players, to take steps to improve their reach across the world. Brands can thus reach out not only to the Indian diaspora but across other communities.” 

Enhanced Working Capital For E-commerce Supplies

Priyank Shah, Co-Founder of Renee Cosmetics, focuses on the beauty industry's anticipated 40 per cent expansion by 2026 and looks forward to budgetary policies supporting startups, tax changes, and enhanced working capital for e-commerce supplies.

“The surge in demand within the beauty industry goes beyond mere numbers; it signifies a profound transformation in beauty standards. With increase in disposable incomes and a heightened emphasis on personal grooming and well-being among Indian consumers, this shift is undeniable. Simultaneously, the rise of Direct-to-Consumer (D2C) brands is notable, and in this budget, we eagerly anticipate regulations that will support and nurture this burgeoning sector,” says Shah.

Talking about expectations, he adds, “In the upcoming budget, we look forward to policies that support startups, and bring about tax changes. We hope for tax relief until the company achieves a certain revenue milestone. The beauty industry will be growing at a massive rate, so we suggest that the government consider enhancing working capital for e-commerce supplies. Our aim for the budget decisions is to shape a beauty business that meets the diverse interests, values, and aspirations of today's customers.”

As the anticipation builds for the Union Budget, these industry leaders underscore the importance of targeted measures to spur growth, innovation, and resilience in their respective sectors. The budget is expected to play a pivotal role in shaping a future where 'Make in India' thrives, and industries continue to contribute significantly to the nation's economic landscape.