Union Budget 2025: Anticipating what it could mean to the average Indian consumer
Budget 2025 could act as a significant driver for development in the consumer and retail sector.
Written by Paresh Parekh and Nitesh Malpani
While the country still shows strong economic potential, the outlook for 2025 remains cautious due to challenges such as rising inflation, slowing investments, and vulnerabilities in certain industries. Slower GDP growth in 2025 could curb consumer spending, particularly on discretionary items, posing challenges for the consumer products and retail sectors.
Strategic measures in the 2025 Budget will be crucial to stimulating consumer demand and revitalising market sentiment. Considering these factors, we anticipate that the Union Budget 2025 will stimulate growth in the sector by implementing the following policy measures:
With the economy rebounding from the global challenges of the past years, there is a palpable sense of expectation for reforms that could ease the tax burden and incentivise savings for the common man. Increasing the basic exemption limit say from Rs 3 lakh to Rs 5 lakh, especially considering the restricted options for deductions and exemptions under the new tax regime (NTR). Elevating the income-tax exemption limits would boost the
public’s spending power, thus driving consumption. Such initiatives are likely to stimulate demand in consumer and retail markets, aiding in the acceleration of economic progress.
Affordable essentials
Rationalising GST rates on essential goods like apparel, footwear, and FMCG products could make them more affordable and drive consumption. Further, addressing the inverted tax structure, allowing GST credit refunds upon store closures, and permitting the transfer of
GST credit balances between registrations can help Indian companies reduce their tax burden. This can lead to lower operational costs, enabling them to offer more cost-effective products to consumers.
The introduction of fiscal stimulus packages and an enhanced PLI (production-linked incentive) scheme can boost local production and reduce import dependence, particularly in the textile and toy sectors. This support can lead to increased competitiveness and lower production costs, enabling companies to offer more cost-effective products to consumers.
In the manufacturing sector, initiatives that encourage local manufacturing, such as the “Make in India” campaign and PLI, can draw investments, increase industrial production, and generate employment opportunities in industries like electronics, textiles etc. Further, by providing small and medium-sized enterprises (SMEs) and startups with more accessible financing options and incentives, job growth could be significantly
stimulated, given that these entities are key drivers of employment within India.
Sustainability incentives
It is expected that the government will provide incentives for green initiatives, potentially reducing the cost of eco-friendly choices for consumers. Measures such as waste reduction and the use of sustainable packaging are likely to increase, giving individuals greater scope to make environmentally friendly decisions. These efforts not only promote a more sustainable lifestyle but also make it easier and more feasible for the average consumer to adopt eco-friendly habits.
Government investment in digital infrastructure is vital to boost e-commerce and technology use in retail, with better connectivity, payment systems, and technological advancements aiding businesses in improving efficiency, customer outreach, and market competitiveness.
Logistics and delivery
Investments in infrastructure and digital connectivity can enhance e-commerce delivery networks, leading to a better consumer experience through quicker and more dependable service.
To sum up, the Indian Budget 2025 could act as a significant driver for development in the consumer and retail sector. The adoption of the proposed initiatives has the ability to enhance consumer confidence, leading to heightened demand and greater spending.
Moreover, these actions could be in sync with the government’s wider economic objectives, contributing to a more robust and vibrant retail environment within the nation.
Paresh Parekh is partner and national leader for tax – consumer & retail sector and Nitesh Malpani is director – tax at EY India.
Written by Paresh Parekh and Nitesh Malpani
While the country still shows strong economic potential, the outlook for 2025 remains cautious due to challenges such as rising inflation, slowing investments, and vulnerabilities in certain industries. Slower GDP growth in 2025 could curb consumer spending, particularly on discretionary items, posing challenges for the consumer products and retail sectors.
Strategic measures in the 2025 Budget will be crucial to stimulating consumer demand and revitalising market sentiment. Considering these factors, we anticipate that the Union Budget 2025 will stimulate growth in the sector by implementing the following policy measures:
With the economy rebounding from the global challenges of the past years, there is a palpable sense of expectation for reforms that could ease the tax burden and incentivise savings for the common man. Increasing the basic exemption limit say from Rs 3 lakh to Rs 5 lakh, especially considering the restricted options for deductions and exemptions under the new tax regime (NTR). Elevating the income-tax exemption limits would boost the
public’s spending power, thus driving consumption. Such initiatives are likely to stimulate demand in consumer and retail markets, aiding in the acceleration of economic progress.
Affordable essentials
Rationalising GST rates on essential goods like apparel, footwear, and FMCG products could make them more affordable and drive consumption. Further, addressing the inverted tax structure, allowing GST credit refunds upon store closures, and permitting the transfer of
GST credit balances between registrations can help Indian companies reduce their tax burden. This can lead to lower operational costs, enabling them to offer more cost-effective products to consumers.
The introduction of fiscal stimulus packages and an enhanced PLI (production-linked incentive) scheme can boost local production and reduce import dependence, particularly in the textile and toy sectors. This support can lead to increased competitiveness and lower production costs, enabling companies to offer more cost-effective products to consumers.
In the manufacturing sector, initiatives that encourage local manufacturing, such as the “Make in India” campaign and PLI, can draw investments, increase industrial production, and generate employment opportunities in industries like electronics, textiles etc. Further, by providing small and medium-sized enterprises (SMEs) and startups with more accessible financing options and incentives, job growth could be significantly
stimulated, given that these entities are key drivers of employment within India.
Sustainability incentives
It is expected that the government will provide incentives for green initiatives, potentially reducing the cost of eco-friendly choices for consumers. Measures such as waste reduction and the use of sustainable packaging are likely to increase, giving individuals greater scope to make environmentally friendly decisions. These efforts not only promote a more sustainable lifestyle but also make it easier and more feasible for the average consumer to adopt eco-friendly habits.
Government investment in digital infrastructure is vital to boost e-commerce and technology use in retail, with better connectivity, payment systems, and technological advancements aiding businesses in improving efficiency, customer outreach, and market competitiveness.
Logistics and delivery
Investments in infrastructure and digital connectivity can enhance e-commerce delivery networks, leading to a better consumer experience through quicker and more dependable service.
To sum up, the Indian Budget 2025 could act as a significant driver for development in the consumer and retail sector. The adoption of the proposed initiatives has the ability to enhance consumer confidence, leading to heightened demand and greater spending.
Moreover, these actions could be in sync with the government’s wider economic objectives, contributing to a more robust and vibrant retail environment within the nation.
Paresh Parekh is partner and national leader for tax – consumer & retail sector and Nitesh Malpani is director – tax at EY India.
