As the Modi government prepares to present its second full budget in its third term, retail industry players are keenly watching for policy measures that will drive economic momentum.

With Finance Minister Nirmala Sitharaman set to present the Union Budget 2025, key players across the FMCG, consumer goods, and retail sectors are voicing their expectations. From tax relief and rural consumption boosts to incentives for local manufacturing and infrastructure development, industry leaders seek policy measures that will drive demand, enhance market penetration, and support business expansion.

Sunil Agarwal, founder and chairman of Joy Personal Care (RSH Global), advocates for a lower GST on essential FMCG products, which would make daily necessities more affordable and drive demand. He also highlights the need for improved rural infrastructure, such as better roads and cold storage facilities, to streamline distribution and minimize wastage.

Whereas Kamal Nandi, business head & EVP at Godrej Appliances, underscores the need for a more favorable tax structure to accelerate home appliance penetration in rural India. With refrigerators at only 38% penetration, washing machines at 18%, and air conditioners at just 8-9%, he believes lower GST rates (currently at 18-28%) and continued rural electrification will encourage adoption and improve quality of life.

Acknowledging the impact of past government initiatives such as MGNREGA and rural infrastructure spending on demand, Mayank Shah, vice president of Parle Products urges for continued investment in rural development and agricultural support to put more disposable income in consumers' hands, thereby boosting spending across categories.

On the potential policy changes, Abhinav Kumar, co-founder of Brand Concepts Limited said that better logistics and rural connectivity can unlock new consumer markets, especially for premium brands. He sees potential in policies that improve financial security, allowing rural consumers to shift their spending beyond necessities to aspirational products.

Industry leaders believe tax relief and job creation policies should take center stage to stimulate consumer demand. Agarwal highlights that high inflation and stagnant incomes have eroded purchasing power, reducing real wage growth to -0.4% to 3.9% over five years, per Deloitte. He believes that revisiting GST rates on essential FMCG goods and providing tax relief to middle-class consumers will encourage spending.

Nandi points to the growing importance of consumer financing in the home appliances sector. He suggests that government policies should focus on economic growth, employment generation, and infrastructure development, all of which would enhance disposable incomes and drive demand.

Further, sharing his opinion, Shah expects three key policy focus areas: job creation, increased infrastructure spending, and tax relief. He stresses that higher employment levels correlate with stronger consumer demand. Additionally, rationalizing taxes on essential goods, such as edible oils, would help combat inflation and provide relief to consumers.

With similar thoughts and expectations, Rishabh Jain, chief financial officer of Bikaji Foods International, highlights the need for tax relief, particularly in the form of reduced taxes on oil. Given the recent substantial hike in oil prices, he emphasizes that a rationalization of these taxes would ease financial burdens on households and industries alike. As oil is a key input in the food sector, such a move would help stabilize costs and, in turn, encourage higher consumer spending.