Budget 2024 expectations: FMCG, Auto, and IT sectors anticipate key reforms

In the fast-moving consumer goods (FMCG) sector, experts anticipate that investments in digital infrastructure, skill upgradation, job creation, and MSME development will indirectly stimulate and bolster consumption spending.

As the Union finance minister, Nirmala Sitharaman, prepares to unveil the budget for the financial year 2024-25 on February 1, various sectors are keenly awaiting key announcements. Despite the interim nature of the upcoming budget due to the looming general election, stakeholders from the FMCG, auto, and IT sectors have outlined their expectations from the finance minister.

In the fast-moving consumer goods (FMCG) sector, experts anticipate that investments in digital infrastructure, skill upgradation, job creation, and MSME development will indirectly stimulate and bolster consumption spending. Axis Securities explains the importance of increased allocations to schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and proactive initiatives in the agriculture sector to support rural household income, thereby revitalizing the overall economy.

Meanwhile, the auto sector, deemed to have the most intricate tax structure by Gyanendra Tripathi, Partner & Leader, Western Region, Indirect Tax, BDO India, is seeking reforms to enhance competitiveness and sustainability. Notably, the electric vehicles (EV) industry is advocating for a reduction in GST rates on EV components and batteries to 5%, along with an extension of FAME subsidies. Clarity on tax treatment for EV charging infrastructure and eligibility of Input Tax Credit (ITC) for charging station setups are also sought after. Additionally, auto component manufacturers are pushing for a uniform tax rate of 18% on parts to mitigate disputes arising from differential tax rates.

In the IT sector, Shashank Srivastava, Senior VP at Forsight.ai, emphasizes the importance of extended tax holidays for startups and incentives for investments in research and development (R&D) in emerging technologies like artificial intelligence (AI). Skilling programs and partnerships with higher education institutions focused on digital skills are also advocated to bolster India’s talent pool in AI and data science, with a target of surpassing 50 million skilled workers by 2030.

While major announcements are not anticipated given the interim nature of the budget, these sector-specific expectations highlight the need for strategic reforms to foster growth, innovation, and inclusivity. As the finance minister prepares to present the budget, stakeholders across industries will be closely watching for indications of the government’s commitment to addressing sectoral challenges and driving economic recovery in the post-pandemic landscape.

With the full budget for FY24-25 scheduled to be tabled in July by the incoming government, stakeholders remain hopeful for sustained momentum in policy reforms and initiatives aimed at bolstering India’s economic resilience and competitiveness on the global stage.