As Union Finance Minister Nirmala Sitharaman prepares to present the 2024-25 Interim Budget on February 1, 2024, the Indian corporate sector is expecting a series of measures to facilitate growth in consumption, reform policies ensuring a balanced field for manufacturers, strategic allocations towards infrastructure development, and a focus on agriculture. Being the last budget of the Narendra Modi government before the general assembly elections, expectations are high for populist measures. The full budget for the fiscal year will be presented after the formation of the new government. Here, we explore the expectations from key sectors in the upcoming budget.
Electric Vehicle Sector Expectations in the Interim Budget 2024
After receiving support through subsidies and tax exemptions for all these years, the EV industry looks to the 2024 interim budget for continued momentum. With industry leaders advocating for the extension of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidy scheme, the hopes are high. They are also seeking a reduction in the Goods and Services Tax (GST) on specific EV components, and stakeholders have emphasized the need for a comprehensive policy on EV parts to ensure transparency and fair conditions.
However, the lack of clarity on GST for spare parts is identified as a challenge, and industry leaders stress the importance of clear guidance on EV incentives for commercial vehicles. There is a strong call for innovation-centric initiatives to facilitate capacity-building and provide incentives for widespread EV adoption, and an expectation for the inclusion of EVs in Priority Sector Lending is also there.
Real Estate Sector
The Indian real estate sector, having witnessed unprecedented growth in 2023, pins its expectations on the 2024 interim budget. It anticipates a continued focus on the Prime Minister’s ‘Housing for All’ vision, with hopes for a tax relief plan to make housing more affordable. Expectations include an increase in the maximum limit of deduction on housing loan interest rates, providing a further stimulus for homebuyers. The sector looks for a steady fiscal environment to maintain consumer confidence, along with an emphasis on sustainability initiatives, urban infrastructure development, and allocations from the Urban Infrastructure Development Fund (UIDF) to drive growth in tier-2 and tier-3 cities.
FMCG Sector
The Fast-Moving Consumer Goods (FMCG) sector expresses optimism, expecting a less volatile market in this fiscal year. Interim budget 2024 expectations are progressive, with a focus on transformative measures as the sector looks to the budget as an opportunity to set the course for sustainable growth, particularly in the rural sector. Recognizing the sluggish rural demand and inflation’s impact on consumption, stakeholders look forward to effective measures that boost rural consumption. It is believed that anticipated policies will aim to safeguard the interests of oilseed farmers and the oleochemical industry, potentially benefitting industries connected to rural settings. The priority on capital expenditure will be welcomed as it will stimulate economic growth and inclusive development.
Manufacturing Sector
In the 2024 interim budget, a crucial aspect of the manufacturing sector is the call for a level playing field. Suggestions include categorizing imports like palm oil, stearic acid, soap noodles, oleic acid, and refined glycerin under restricted items or implementing a 25% import duty on finished products versus raw materials. Industry’s proposal also suggests granting duty-free import privileges for raw materials to entities with processing facilities, to stimulate innovation and promote competitiveness. According to the experts, achieving this balance is important for a conducive environment for the Make in India initiative.
Digital Commerce and Infrastructure Sector
The proposed focus on strengthening investments in the Open Network for Digital Commerce (ONDC) and digital public infrastructure aligns with the evolving consumer behavior. This strategic move reflects an understanding of the importance of staying ahead in the digital age. As consumer preferences continue to shift towards digital platforms, investments in digital infrastructure are seen as critical for the overall growth and competitiveness of various industries.
The expectations from the 2024 Interim Budget are diverse, covering important sectors crucial to India’s economic development. As the nation eagerly awaits the finance minister Nirmala Sitharaman’s announcements, the budget holds the potential to shape the growth of key industries, ensuring a balanced economic condition.