Budget Reactions: FMCG players warn of price hike

The fast moving consumer goods (FMCG) industry expressed disappointment with the Budget proposal to hike excise duty and said they will be forced to increase prices at a time when sales are already muted and margins are under immense pressure. Finance Minister Pranab Mukherjee increased excise duty to the pre-crisis level of 12% from 10%.

"I expect this Budget to have a slightly inflationary effect due to the cascading effect of companies passing on the excise duty increase to consumers," Godrej Consumer Products Managing Director A Mahendran said. Marico Group Chief Investment Officer Milind Sarwate said, "the impact on Marico is somewhat negative, as the increase in the excise duty will push up cost." Expressing similar sentiment, Dabur Chief Executive Sunil Duggal said, "the hike in standard excise duty is being seen as highly inflationary steps that may hurt consumerism." Concurring with them, Emami Chief Executive N H Bhansali said "the excise duty hike will severely impact manufacturing sector." Britannia Managing Director Vinita Bali said the steps introduced in the agriculture sector will lead to increased demand and consumption. "A few of the positives of the Budget include raising the plan outlay for agriculture by 18%, initiatives for R&D in farm sector, allocations for improving warehousing and storage facilities for agricultural produce. All these, executed well and on time, will address the supply side on food and agriculture that will drive domestic demand and consumption, which is one of the key priority areas," Bali said.