Anjali Agarwalmoneycontrol.com
Finance MInister Arun Jaitley Saturday announced an excise duty hike on tobacco to Rs 70 per kg from Rs 60 per kg. The government also increased excise duty on cigarettes by 25 percent for length not exceeding 65 mm and 15 percent for other cigarette categories.Similar increases were also proposed on cigars, cheroots and cigarillos.
The government also reiterated its stance on the goods and services tax (GST) which is expected to roll out from April 1, 2016. State of the industry:
The fast-moving consumer goods industry is battling with stagnant volumes, and slow growth. India's consumer story has just about managed to hold its head above water through 2014 but year 2015 promises to be one of hope, with experts expecting double-digit growth for the sector as inflation has lost some of its bite.
Expectations:
* The Budget wish-list of retail and FMCG sector stroke several familiar notes like the much-awaited goods and services tax (GST), revival in economic growth and improved infrastructure and favourable tax policies.
* FMCG companies were hoping Finance Minister Arun Jaitley's Budget would fire up enough excitement to make customers a bit more liberal when it comes to opening their purse strings.
* Another important issue was category specific tax rationalisation with cigarettes being one key area.
* The sector was also looking for policies targetting India's rural growth in the Budget with rural areas and smaller towns driving overall FMCG and consumer durable growth.
* Government's focus on inclusive growth agenda was expected to increase disposable income in the long run which would lead to rise in discretionary consumer spending, said CARE.
Announcements in the last Budget
* In Union Budget 2014, the government hiked the excise duty from 12 percent to 16 percent on pan masala, from 50 percent to 55 percent on unmanufactured tobacco and from 60 percent to 70 percent on gutkha and chewing tobacco.
* An additional excise duty of 5 percent was levied on aerated waters containing added sugar.Stocks that can be impacted: ITC, Godrej Consumer, HUL, Jubilant Foodworks
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