Consumer companies upbeat as Budget tax relief boosts middle-class spending

This comes at a time when urban consumption is under pressure, as reflected in fast-moving consumer goods (FMCG) companies' October-December quarter results

Consumer companies have reason to rejoice. The Budget announcement provides tax relief to the middle class, making income up to Rs 12 lakh tax-free and putting more money in consumers’ hands.

 

The government’s push to boost rural infrastructure will also support rural consumption growth.

 

This comes when urban consumption is under pressure, as reflected in fast-moving consumer goods (FMCG) companies’ October-December quarter results.

 

In the July-September quarter, urban demand for FMCG grew 2.8 per cent, while rural demand rose to 6 per cent from 5.2 per cent in the April-June quarter, according to NielsenIQ. The research firm also noted that the FMCG sector grew 5.7 per cent by value and 4.1 per cent by volume in the July-September quarter, driven by rural demand.

 

 

“The focus on tax relief and measures aimed at increasing disposable incomes, especially for the middle class, will strengthen purchasing power and drive demand for quality food products,” said Angshu Mallick, managing director (MD) and chief executive officer (CEO) of Adani Wilmar.

 

Dabur India expressed similar optimism.

 

“The substantial tax relief measures, particularly making income up to Rs 12 lakh tax-free, will provide essential financial respite to middle-class families, increasing their disposable income, encouraging spending, and promoting overall economic growth,” said Mohit Malhotra, CEO of Dabur India. 

 

Malhotra is optimistic that this move will help stem the slowdown in urban consumption and put it back on a growth trajectory.

 

“The Budget’s emphasis on the farm sector, with enhanced support for farmers through increased Kisan Credit Card (KCC) limits and targeted financial incentives, will not only strengthen the agricultural backbone of our country but also ensure food security and sustainable growth in the sector,” he added.

 

Britannia Industries’ Executive Director (ED) and CEO Rajneet Singh Kohli also lauded the government’s decision to exempt income up to Rs 12 lakh from taxation, saying it directly strengthens middle-class purchasing power.

 

“This increased disposable income, alongside support for farmers and micro, small, and medium enterprises (MSMEs) through enhanced credit guarantees, creates a powerful consumption stimulus across markets. The government’s continued commitment to investments in infrastructure and research and development, backed by disciplined fiscal management targeting a 4.4 per cent deficit, establishes a strong foundation for sustained economic growth and builds confidence in India’s capability and potential.”

 

Gautam Singhania, chairman and MD of Raymond group, said the Budget announcement will drive household spending, which is essential for retail and real estate sectors.

 

“Higher discretionary spending signals economic vitality, fuelling consumption-led growth and strengthening market dynamics,” Singhania said.

 

The automotive sector also expects a lift in demand, especially for entry-level motorcycles and small cars.

 

Rakesh Sharma, ED at Bajaj Auto, said the Budget’s push to give consumers more money is “certainly a positive”.

 

On whether the 100 cc bike segment (where entry-level bike growth has been half that of the 125 cc and above segment) will return to showrooms, Sharma said, “All segments should get a lift, particularly if sentiment also improves on the back of these breaks.”

 

C S Vigneshwar, president of the Federation of Automobile Dealers Associations, said, “The increase in the income-tax exemption limit to Rs 12 lakh will directly boost demand for two-wheelers, passenger vehicles, and electric vehicles, as consumers have more disposable income to upgrade their vehicles.”

 

For the rural economy, the Pradhan Mantri Dhan Dhanya Krishi Yojana, benefiting 17 million farmers, along with the expansion of the KCC loan limit, will drive demand for tractors, small commercial vehicles, and two-wheelers, he added.

 

“MSMEs are set to thrive with higher credit limits, an enhanced fund-of-funds for startups, and new financing options — a move that will also encourage the expansion of automobile dealerships and fleet businesses,” Vigneshwar said.