FMCG sector urges infra investment, tax reforms, job creation in Budget 2025 to boost demand

New Delhi [India], January 21 : The fast-moving consumer goods (FMCG) and retail sector has emphasised the need for investments in digital infrastructure, skill development, and MSME promotion in the upcoming union budget to reignite consumption and spending in the economy.
According to a report by Axis Securities, these measures are crucial to supporting growth, particularly in rural areas.
It said, "Investments in digital infrastructure, skill upgradation, job creation, and MSME development to indirectly reignite consumption and spending in the economy, especially in rural areas."
The report highlighted that targeted investments in job creation, along with enhanced farm and non-farm incomes, could play a significant role in reviving the rural economy.
It also noted that initiatives such as increased allocations under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), coupled with government schemes and incentives, are expected to strengthen purchasing power in rural regions.
Furthermore, the report stressed the importance of increased capital expenditure on rural infrastructure and connectivity to boost demand. These steps, the sector believes, would stimulate consumption in underserved areas and drive economic recovery.
Urban areas, too, require attention, with the report advocating for increased allocations to urban development projects and the services industry. This would not only create jobs but also spur urban demand and enhance remittances.
A key demand of the FMCG sector is the revision of income tax slabs to increase disposable income and stimulate demand across consumer categories.
However, the sector has warned against raising excise duties or the National Calamity Contingent Duty (NCCD) on cigarettes and tobacco products, stating that such moves could negatively impact cigarette manufacturers.
It said, "Revising income tax slabs will boost demand across consumer sector. Raising Excise Duty or NCCD duty on cigarettes and tobacco products will be negative for cigarette companies."
The report also called for higher rural spending to provide relief to vulnerable sections of the population, especially as inflation and tight monetary policies have eroded their purchasing power. It recommends continued support through food and fertilizer subsidies, along with a stronger focus on affordable housing to address the broader economic challenges.
These measures as per the report if incorporated into the budget, could help bolster demand and drive sustainable growth in the FMCG sector and the economy at large.