FM Piyush Goel’s Interim Budget evokes a positive response

Hailed as the election budget by many, the Union Budget 2019-20 is welcome by a cross-section of the cosmetics industry in India

Image Source: http://www.piyushgoyal.in/

The interim Finance Minister Piyush Goel presented the Interim Union Budget 2019-20 on February 1, 2019-20. Even as the opposition clamour about the government deviating from the norms of an interim budget continued, the people in general, especially the working class, looked happy for the goodies that the budget doled out. The cosmetics industry representatives seemed to provide an overall positive response to the new budget proposals. Here are a few prominent reactions from the leading cosmetics industry players:

“A progressive budget”
– Yashu Jain, Managing Director, MATTLOOK Cosmetics:

The budget is progressive and it has surely covered the issues that are existing in the economy. The budget has been indeed surprising as it is different from its predecessors.

Some of the announcements made by Honourable MoF Shri Piyush Goyal are definitely meeting the expectations of the common man, which will lead to higher consumption, enhanced liquidity in the market, increase in investment and savings.

Giving a tax benefit till 5 lakhs is going to prove beneficial to the middle class and something that they have surely wished for. It is in fact beyond their expectation.

Also, the farm sector was depressed and finally they will get relief. The government has planned to give 12 crore farmers 6000 rupees. This is a big move which will uplift their current condition. It will also generate industrial demand and boost production.

With the interim budget 2019, there will be an increase in disposable income which will definitely boost the consumption and investment story in India. The increase in savings will lead to a higher spend on cosmetic products, consumer durables, FMCG, automobiles, farm equipment etc. leading to higher growth, financial literacy and penetration etc.

The present government has certainly initiated some bold steps since coming to power. These decisions were surely far sighted. The recent budget brings relief to the middle-income masses and farmers. This is a welcome change! The Interim Union Budget 2019 also promises to be pro-growth and ushers a new era of transparency. Complete digitalization of tax assessment is a welcome step too.

So be it escalating living standards by their cleanliness drive, providing benefit to the common man, the farmers or strengthening security, all-in-all, the government is surely far-sighted. It is working at the root level for that. 

“Election-oriented—totally!”
– Ms. Kajal Anand, MD, Debon Herbals

Presently, the Union Budget 2019-20 seems totally votes-oriented. We need to wait and watch whether the schemes actually are going to be percolated down the line.

I am not expecting much of an impact on cosmetics business except the benefit to the salaried people [which may result in some purchases].

As a cosmetics manufacturer, I am not very excited about this. As such, there is no concrete benefit to manufacturers like us. We are only paying taxes with no returns in spite of helping generate demand for insurance and pension sectors. However, for small cosmetics manufacturers, this budget may provide some marginal relief as the government has reduced the presumptive profit rate from 8% to 6%.

“Many hits, but a few misses too!”
– Nikunj Harlalka, Director, CG Herbals:

The exemption on Income Tax will boost the in-hand income of middle-class consumers which will eventually be spent on acquiring lifestyle goods like cosmetics. The premium segment of cosmetics is gaining major traction with established players like Marico, Hindustan Unilever launching premium personal care brands. On the other hand, there is an increase in interest in the availability of risk capital right from seed stage to growth stage for entrepreneurs in the cosmetics industry.

The two per cent rebate provided to MSMEs on bank loans of up to Rs. 1 crore will have an immediate impact on the borrowing cost of cosmetic industry players, a majority of whom belong to MSME segment.

The budget, however, has done little to incentivise the MSME and start-ups in the cosmetic industry. The cost of compliance has increased so much that running micro or small enterprise in the cosmetic manufacturing sector has become almost impossible.

The government, while should encourage statutory compliances like FDA, FASSAI and Pollution Control norms, it should also give concessional rates for the cosmetics sector to acquire these compliances. Same should apply to non-statutory compliances like GMP, Organic, Vegan, Kosher, and Halal which are now being increasingly demanded by the consumer. Overall, I would give current budget 60/100 marks.

“Good for farm sector; but might prove inflationary”
– Ms. Sargam Dhawan, Director – Paul Penders (PP) and Planet Herbs Lifesciences (PHL)

The Interim Union Budget 2019-20 has extended some genuine benefits:

A) Rs 6,000 per annum in four instalments to farmers costing the exchequer Rs. 75,000 crore. This big infusion can help rural growth. I expect the lower segment of FMCG products, two-wheelers, cycles, etc. will see growth in sales.

B) Small taxpayers with up to Rs 5,00,000 taxable income will now get a tax rebate. The urban lower middle class will get benefited with this provision and lead to higher consumption by this category of consumers.

C) The new provisions such as no tax on notional rent of the second self-occupied house, Section 80-IBA benefits extended to housing projects approved till March 31, 2020, tax being exempted for builders on notional rent received on unsold inventories for two years, will provide a boost to the housing sector.

D) The mega pension scheme announced for the labour class will make more funds available to banks to give loans. This may reduce interest rates in the short term but lead to higher inflation later if funds are not utilised with prudence.

The sales of entry-level cosmetics such as vaseline, shampoos or shampoo pouches targeted at lower middle class will increase.

My overall take: Good for the farm segment and marginalised classes. May be inflationary. Might help BJP to return to power giving stability to the economy and the focus areas and projects.

“Growth oriented”
– Sandeep Chauhan, Manager – Operations, Volamena Cosmetics:

The market will maintain healthy growth due to a rising preference for specialised cosmetic products such as organic, herbal and Ayurvedic products. Principal areas that are expected to grow include colour cosmetics, fragrances, specialised skin care and make-up cosmetics.