Union Budget 2023-24: Finance Minister Nirmala Sitharaman will soon present the annual union budget for FY 2023-24. Different sectors of the economy are anticipating various initiatives and expect certain measures to be announced. The personal care industry is no different. It has a wishlist and suggestions for overall growth of the economy as well as some demands for the emerging direct-to-customer (D2C) brands.
Industry experts have urged the government to support D2C brands with their own manufacturing units with special manufacturing zones. Some urged to encourage research and development (R&D) in the beauty and skincare sector.
They feel that boosting domestic demand is going to be crucial for the overall economy as globally there is an economic slowdown due to multiple reasons.
Manish Chowdhary, co-founder, WOW Skin Science, said, “There is an economic slowdown globally and the fear of recession looms large ahead of us due to war-driven energy and food crisis, high inflation rate and crisis in major markets like US, China and Eurozone. The market is still in recovery mode post pandemic. While we are facing some of the heat due global economic state, but as per IMF India and certain other Asian markets are more resilient.”
“As per some market reports and our outlook, this budget the government is expected to spend on building the rural base – focussing on rural infrastructure, agricultural schemes, and job schemes for the rural areas. This should have the expected outcome of aiding the recovery of the rural areas and improving their economic status,” Chowdhary added.
Even though India is seen to have a stronger market profile than many globally, but it cannot remain isolated and is expected to face the aftereffects of impending global recession. Trade with global markets will experience a slowdown – which means that the government should focus on strengthening the markets within the country by improving employment status and boosting domestic demand.
“The government has to focus on creating growth within the country amidst the global slowdown. This can happen by creating a positive growth environment for smaller businesses and start-ups by offering better tax break and improved taxation system, promoting opportunities for investments and improving the financial ecosystem,” Chowdhary urged.
K V Hariharan, senior vice president, FP&A , strategic planning and data analytics, Amway, too underlined the increased consumption within the country.
“Last few years, we have witnessed several economic reforms announced by the government supporting economic growth. However, considering the current scenario, with the fear of recession and inflationary trends, budget 2023 should focus on sustaining growth, strongly supported by increased consumption and a favourable investment atmosphere in the country,” Hariharan said.
He highlighted that as an FMCG Direct Selling (DS) company, the DS channel has huge potential and can effectively partner with the government on nutrition and health skill development .
“We expect budget 2023 to have healthcare policies that will support the country’s shift to preventive healthcare, making healthcare more accessible as people continue to prioritise health and wellness, which remains the core of most purchase decisions of consumers across segments,” Hariharan urged.
If the government can consider lesser taxes, then they will be helping the large population to move towards wellness by making it affordable.
“We hope the government rationalises GST on healthcare supplements from 18% to 5% in the upcoming budget. This will be a welcome move, considering a holistic healthcare system combined with nutraceuticals and health supplements provides significant economic value and will play a vital role in contributing to reviving the Indian economy,” Hariharan added.
Harini Sivakumar, founder and CEO of Earth Rhythm, emphased on the need of R&D. “When the country begins investing in its own R&D processes for the beauty and skincare sector, for instance, it will essentially own the formulation(s), have the option of patenting them, and earn several benefits in the process,” Sivakumar said.
He added that there are very few Indian D2C brands that have their own manufacturing unit(s) and own the manufacturing process altogether.
“I believe that in a bid to reduce these offshore dependencies, the government should introduce provisions that support such entrepreneurs or businesses that are not only building their own home-grown brand, but also building and developing the entire manufacturing capacity of the country. Subsidised loans would be one way to go in this regard,” Sivakumar urged.
The government should also support D2C brands with their own manufacturing units with special manufacturing zones. The current manufacturing zones that are within cities are either too cramped and populated or the size of the unit tends to be limited. Those outside the cities are too distant, hence not feasible.
Deepak Gupta, co-founder and COO, Bombay Shaving Company, also highlighted global headwinds and indicators of slowdown and suggested
“I’m encouraged by the due importance the FM has given to MSMEs, start-ups and local businesses in FY22. But the year ahead could be challenging, given the global headwinds and indicators of slowdown. I would expect the government to double down on growth and local manufacturing, encouraging ‘proudly Indian’ brands like Bombay Shaving Company with better tax structures and schemes – for imports, exports & the supply chain at large. Better benefits for investors and relaxation of tax on ESOPs is something that would be great to see, as well.
Given that local job creation (has been) and will be a key focus area – measures like these will energise and fuel the entrepreneurial spirit of the country, thereby creating more value and opportunities for the country. I’m very optimistic about the ‘India growth story’ and look forward to the FM enabling companies like us play an important part in realising it.”
Additionally, on consumption demand linked to the growth trajectory of the industry, experts feel that the union budget should consider the reduction in income tax as it will positively impact disposable income, support the salaried class, and strengthen the spending power of consumers. This will provide the much-needed relief to the middle class, which was the worst hit by the COVID-19 pandemic followed by soaring prices.
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