FMCG cos fore­see pre-DeMo growth rates only by April

The Economic Times - - Front Page -

Sa­gar Malviya & Neha Tyagi

Mum­bai: In­dian con­sumer-goods com­pa­nies need to wait un­til April for re­vival of growth that ap­peared stunted after the Novem­ber 8 cur­rency swap, which crimped the purchasing power of mil­lions of ru­ral house­holds us­ing cash to buy sham­poos, soaps or pack­aged cook­ies.

Over the past decade, sales of branded daily-needs in the na­tion of 1.3 bil­lion peo­ple have in­creas­ingly re­lied on the vast ru­ral hin­ter­lands, home to about 800-mil­lion-plus peo­ple whose pur­chase be­hav­iour is largely linked to farm out­put. There­fore, an­nual mon­soon rains that help ir­ri­gate In­dian farm­lands play a vi­tal role in shap­ing buy­ing pat­terns in Asia’s third-big­gest econ­omy, and below-par rains over the past cou­ple of years are of­ten blamed for stag­nant sales growth at com­pa­nies such as Hin­dus­tan Unilever, Colgate, Dabur or Parle.

Prime Min­is­ter Naren­dra Modi, who’s been seek­ing to per­suade Ap­ple chief ex­ec­u­tive of­fi­cer Tim Cook to set up plants in In­dia, tweeted a me­dia re­port on Satur­day that it would start mak­ing iPhones in Ben­galuru soon. Mean­while, peo­ple fa­mil­iar with the mat­ter have said the com­pany is still in talks with the gov­ern­ment over con­ces­sions re­gard­ing lo­cal man­u­fac­tur­ing.

When asked about the fi­nal call on IGST ex­emp­tion, Ad­hia said the de­ci­sion would lie with the GST Coun­cil.

GST will sub­sume cen­tral taxes such as cen­tral ex­cise duty, ser­vices tax, coun­ter­vail­ing duty and state taxes in­clud­ing value-added tax, oc­troi and pur­chase tax. It is ex­pected to be im­ple- mented from July 1. Coun­ter­vail­ing duty is levied as part of im­port duty in lieu of cen­tral ex­cise duty. The Cu­per­tino-based com­pany had sought the cen­tral gov­ern­ment’s as­sur­ance on CVD ex­emp­tion for elec­tronic com­po­nents for 15 years as it looks to set up fac­to­ries in In­dia. The com­pany has also sought re­lax­ations un­der the mod­i­fied spe­cial in­cen­tive pack­age scheme (M-SIPS). The gov­ern­ment scrapped the ex­emp­tion for pop­u­lated cir­cuit boards (PCBs) in the Fe­bru­ary1Bud­get. It had re­moved CVD ex­emp­tion for three com­po­nents, in­clud­ing PCBs, in the last Bud­get, but re­stored it fol­low­ing in­dus­try de­mand. The ex­emp­tion has been abol­ished to boost the Make in In­dia pro­gramme.

Ap­ple wants the ex­emp­tion as its com­po­nents mak­ers may not re­lo­cate im­me­di­ately to In­dia, in­creas­ing its de­pen­dence on im­ported parts.

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