Consumer goods, durables stocks rise on income-tax relief in Union Budget 2025

Consumer goods makers were also looking for lowering of indirect taxes to boost demand.

Stocks of fast-moving consumer goods (FMCG) and consumer durables jumped sharply with Budget 2025 giving income-tax relief to buyers.

ITC, HUL, Dabur India climbed over 4 percent in trade on the NSE, at 12.20 pm. Further, Whirlpool, Blue Star and Kalyan Jewellers jumped on the Nifty Consumer Durables index.

On February 1, the Finance Minister Nirmala Sitharaman announced that income up to Rs 12 lakh will be tax-free. This move in the Union Budget 2025 is expected to boost household income, driving higher consumption and increasing demand for consumer staple products.

FMCG companies had been hoping that Sitharaman would increase money in the hands of buyers through income-tax relief, in the form of higher basic exemption limit or higher standard deduction; job creation through government spending; and lower indirect taxes.

Consumer durables were hoping for similar taxation measures, along with lowering of import duties and widening coverage of production-linked incentive schemes (PLIS).

For consumer goods
In a pre-Budget conversation with Moneycontrol, Dhiraj Relli, MD & CEO, HDFC Securities, said, "Initiatives to boost private consumption expenditure, which remains below pre-pandemic levels, could catalyse consumer spending across both urban and rural sectors. Additionally, direct tax incentives could reinvigorate demand for discretionary consumer goods, a segment that has experienced sluggish growth in recent months.”

Higher spending on infrastructure was also hoped for, since it could lead to job creation, which in turn boosts consumption. A certain segment of the analysts believed that the government would take the lead in this, since private capex continued to be sluggish.

In their pre-Budget note, Motilal Oswal had observed that any support given to the construction sector, which is the second highest employer in the country, would be highly effective too.

Consumer durables
Even the consumer-durables industry hoped to benefit from increasing disposable cash in the hands of people.

In a pre-Budget conversation, Anil G. Verma, CEO, Godrej Enterprises, had said that more money in the hands of customers will not just "provide tailwinds to the consumer durables industry but also have a multiplier effect on the industries that serve them, through increased capacity utilization and hence also pave the way for private investments to flow in at a faster pace".

The durables industry was looking for an expansion of the PLI Scheme. Bank of America Securities had said that the FM is likely to announce a PLI of Rs 25,000 crore for electronic components manufacturing.

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