labels: consumer goods, economy - general, union budget 2007
FMCG sector: Less taxing times?news
10 February 2007
It may have fallen short of growth expectations in the past, but there's no denying that the FMCG sector is on the fast track. CNBC-TV18 reports that the budget could just take this growth story forward.

It's hardly the sort of thing that crosses your mind when you're stocking up on home supplies. But 35 per cent of the price of a consumer product today includes just indirect taxes, a figure which is the highest in Asia. And that's probably why last year, the finance minister proposed to introduce an integrated Goods and Service Tax by April 2010.

"To my mind, this is an excellent move. It will add one or two percentage points to India's GDP growth once we have such a tax," comments Adi Godrej, chairman, Godrej Industries.

"If you can reduce the prices through this indirect tax relief, through a national GST, there will be a tremendous virtuous circle of consumption increase, production increase, employment increase and tax increase," says Bharat Patel, Chairman, P&G India.

This year, the industry hopes the finance minister will appoint an empowered committee to get the GST rolling. Another priority on the wish list is to exempt sales promotion schemes from the ambit of fringe benefit tax - something companies argue just cannot be treated as employee benefits.

Last year, the FM waived off excise duty on pastas, condensed milk, ice creams and even meat and poultry products. This time around biscuit companies are hoping to see some relief.

"For a mass market product, what we've got to do is level the playing field and make sure this industry is not inordinately taxed, as compared to other product categories it competes with, whether it is namkeens (savouries), fruit juices or salty snacks," says Vinita Bali, CEO, Britannia.

What's important for FMCG companies is more consumers. So everyone is hoping for a reduction in direct income taxes. More the disposable income - more money to spend.

 search domain-b
FMCG sector: Less taxing times?