Budget 2015: No major initiatives for consumer goods and appliances industry

It also clearly lays down the GST implementation timeline to April 2016 and that is a welcome step for the entire consumer goods industry as it helps demand and reduces cost of doing business.

Gunjan Srivastava        Last Updated: March 2, 2015  | 22:36 IST

The Budget 2015/16 outlines the vision of the government and also the fiscal deficit targets for the foreseeable future. It provides a clear thrust to infrastructure, social equity and employment generation.

It also clearly lays down the GST implementation timeline to April 2016 and that is a welcome step for the entire consumer goods industry as it helps demand and reduces cost of doing business.

UNION BUDGET 2015-16:Key highlights | Full coverage | Full speech | Video

There have been duty reductions in 22 components across the consumer electronics and appliances sector - but it is largely applicable on premium categories where penetration in India is still low. This may not have any short-term impact on local manufacturing since the premium categories still do not have the critical volumes in the local market to justify local manufacturing.

Overall, no major sector-specific reforms for the consumer durable industry have been announced.

Consumption and demand remain weak on the ground and the Budget on the face of it has little or no impact on stimulating the same.

The biggest challenges facing the consumer goods industry are stimulating demand (both first-time purchase and upgrade) and also the increasing cost to serve. Increase in MNREGA allocation may help in improving rural demand for essential durables and appliances.

It is clear that the Finance Minister and Union Budget cannot be the magic wand for stirring up demand. That task will have to be done by the industry and its players.

The author is Managing Director & CEO, BSH Household Appliances Manufacturing Pvt. Ltd.

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