With the Union Budget 2025 just around the corner, the liquor, tobacco, and gaming industries are hoping that the government would announce certain reforms that could address current challenges like steep taxation and cumbersome regulatory frameworks.
Simplifying liquor licensing
The Federation of Hotel & Restaurant Associations of India (FHRAI) has highlighted the complexities in excise and liquor licensing rules, urging the government to simplify the process with nominal fees.
FHRAI envisions a system similar to FSSAI registration, which would encourage compliance and enable the hospitality sector to meet growing consumer demand. The federation is optimistic that these reforms could bolster India's ambition to become a $1 trillion tourism economy by 2047.
By addressing these barriers, FHRAI believes India could attract more global tourists, create jobs, and increase foreign exchange earnings, and contribute to the overall growth of the economy.
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Gaming players wish for lower taxes, clear framework
The gaming sector is seeking urgent tax reforms, particularly after the 1400 percent GST hike in October 2023.
Amrit Kiran Singh, President of the Skill Online Games Institute (SOGI), highlighted the adverse impact of this increase, highlighting that the massive 1400 percent increase in GST in October 2023 ostensibly introduced from a moralistic perspective, has not met its objectives.
According to Singh, the government move led to 83 percent of Indian players spending on online games to migrate from Indian platforms to "no tax" offshore (mainly Chinese) platforms.
He emphasised the need to reduce taxes through the promised review mechanism to bring Indian players back to domestic platforms. Further, he believes that negatives like addiction can be mitigated through the use of "smart tech".
Additionally, Kunal Patni, Executive Director and Country Head at Natural8 India underscored the importance of focusing on helping gamers upgrade their skills through incentives and free training programs, fostering growth in India's rapidly expanding online gaming industry.
"Initiatives to promote entrepreneurship and skill development within the gaming ecosystem can create significant employment opportunities. By addressing these aspects, the budget can not only empower gamers but also position India as a global hub for gaming innovation, contributing meaningfully to the digital economy."
Budget 2025: FMCG sector may see policy measures aimed at driving consumption, experts say
Tobacco taxation in focus
ITC sees a low chance of a sharp cigarette tax hike in the upcoming budget, given last year's small increase. Historical data shows that steep tax hikes lead to limited revenue growth and a rise in illicit trade.
"Raising excise duty or NCCD duty on cigarettes and tobacco products will be negative for cigarette companies," stated a recent report by Axis Securities.
As is the case on all Budget days, key tobacco players like ITC, Godfrey Phillips, and VST Industries will be in the spotlight on February 1. In the gaming sector, stocks such as Nazara Tech and Delta Corp could see significant movement if there are changes to the taxation structure. Meanwhile, liquor stocks including Globus Spirits, Radico Khaitan, Som Distilleries, and United Spirits will also be closely watched.
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