NEW DELHI: Consumer-facing businesses — ranging from everyday consumables to big-ticket items like automobiles — are optimistic that the government’s decision to cut personal income tax will lead to higher disposable income, ultimately driving demand.
The tax relief comes at a crucial time when urban consumption has been under pressure, as highlighted in recent quarterly earnings of major FMCG firms.
Finance Minister Nirmala Sitharaman on Saturday proposed exempting income up to Rs 12 lakh from tax, with salaried taxpayers benefitting from a higher exemption limit of Rs 12.75 lakh due to a Rs 75,000 standard deduction. Additionally, individuals in higher tax brackets will see benefits of up to Rs 1.10 lakh under the new tax regime.
Gautam Singhania, CMD of Raymond Group, called the income tax exemption a “game-changing reform,” expected to drive household spending, an essential growth driver for sectors like retail and real estate.
“With the middle-class now driving nearly 60% of domestic consumption, rising purchasing power is likely to accelerate demand for aspirational and premium products,” he added.
Angshu Mallick, MD & CEO of Adani Wilmar, echoed similar sentiments, stating that the focus on tax relief and increasing disposable incomes, especially for the middle-class, is a positive move that will strengthen purchasing power and drive demand for quality food products.
“The focus on middle-class addresses a long-standing demand and is a positive step towards a more inclusive and robust economy,” said Mohit Malhotra, CEO of Dabur India. He said the move will help curb the slowdown in urban consumption and put it back on a growth trajectory.
The passenger vehicle industry, which has been grappling with sales stagnation, is also hopeful that higher disposable incomes will encourage consumers to buy automobiles.
RC Bhargava, chairman of Maruti Suzuki, stated that the auto industry’s growth is closely tied to consumers’ purchasing power and economic growth, and the tax cut will be a key factor in accelerating demand.
Anish Shah, Mahindra Group CEO & MD, noted that the revised tax structure will encourage private sector capital expenditure.
The jewelry industry is also optimistic about a demand surge. TS Kalyanaraman, MD of Kalyan Jewellers, believes the tax reforms will ensure that the consuming class has more discretionary income, leading to a significant demand stimulus.
The electronics industry has welcomed the budget. Pankaj Mohindroo, chairman of India Cellular & Electronics Association, said rationalising tariffs on key inputs and components creates a more competitive cost structure and encourages deeper integration with global value chains.