Budget 2024: Focus should be on '100% FDI in multi-brand retail trade,' Deloitte India says

As India prepares for the forthcoming Union Budget, scheduled on July 23, one of the key focus areas for the government should be around the consumer industry. Anand Ramanathan, Partner and Consumer Products and Retail Segment Leader at Deloitte India said that the government should consider allowing 100% FDI in multi-brand retail trade, at least for goods that get manufactured in India. He said that the government should also implement a cohesive national policy in this regard.

Notably, India's consumer industry is expected to grow and become world's 3rd largest by 2027, behind the US and China. In India, the middle class is the main driver of consumer demand and expenditure. However, there's still a disparity in consumption between urban and rural areas in the country.

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Ramanathan suggested that continuous investment in ONDC and digital infrastructure building is required to open new growth avenues in the Indian economy.

Further, the government's focus on capex and private-sector manufacturing and service activity should support income generation and boost economic activities. The focus should be on the local implementation of the government policies.

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According to Ramanathan, the rise in rates of levy for MUVs and luxury sedans has made the segment unaffordable for most consumers. Higher rates will not only directly affect consumers but will also have indirect consequences in terms of increased pricing for taxis, a higher logistics burden, etc. To address the limited volume growth of the industry, the government may reconsider high rates, he suggested.

Besides, reducing the import rates for EVs should be the government’s top priority, as it will boost the automotive sector and support the logistics and transportation sectors.

"To boost India’s viability as the next manufacturing hub, especially with the China+1 strategy to bolster investment in the country, the government should consider extending the concessional tax regime. This will help boost investor confidence and will also supplement the PLI schemes being run by the government," Ramanathan added.