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What the industry expects from Budget 2017

Media experts and players, and brand custodians share their expectations from the budget and how the industry and brands will benefit from it

BestMediaInfo Bureau | Mumbai | January 31, 2017

Union-Budget

Simplification of taxes, boost for digital economy, execution of cashless economy options, additional benefits for farmers and lower individual and corporate taxation are some of the expectations that the media, advertising and marketing industry has from Budget 2017 that will be announced on February 1.

Best Media Info asked media experts, players in the sector and brand custodians what they expect from the budget and how it would benefit the industry and their brands.

[caption id="attachment_78123" align="alignleft" width="150"]Sudhanshu Vats Sudhanshu Vats[/caption]

Sudhanshu Vats, Group CEO, Viacom18 and Chairman, Media and Entertainment Committee, CII

This Budget will be a ‘transformational’ budget. The government has already showcased its commitment to alter the status quo by changing the classification of expenditure, subsuming the rail budget and advancing the date of the announcement. I have always maintained that as an industry, we have a lot to gain from an economy that is buoyant in the aggregate sense. This year’s budget will enable just that -- a revitalised economy that’s raring to go. Demonetisation is sure to expand the tax base in the medium term. I am certain that the government will use this added fire-power in a prudent manner. Hopefully, we’ll get to hear policy measures that encourage the digital economy, make India’s tax system globally competitive and put more money in the hands of Indians. As the saying goes, ‘the best is yet to come’.

[caption id="attachment_80936" align="alignleft" width="150"]Ashish Bhasin Ashish Bhasin[/caption]

Ashish Bhasin, Chairman and CEO South Asia, Dentsu Aegis Network

At the moment, the laws of taxation which govern the advertising industry are very complex. We are all caught between value added tax (VAT) and service tax. Considering the market conditions, I hope that there would be some simplification and the service tax rate will come down; it is at 15 per cent now after the surcharges. The other related fear is that even if goods and service tax (GST) makes it as a single point taxation and simplifies the whole thing, but it seems to be working only for the goods and not for the services. For services, it might only complicate life even more. We will have to file (tax) returns in different states; point of origin and point of service are in dispute. While the taxation was supposed to simplify things and create ease of doing business, it seems to have (unintentionally) complicated things more for the services sector. We don’t mind paying legitimate taxes, as advertising industry, but too much of time gets wasted in the administrative process which is non-productive. Clarity of rules, removal of discretionary power to the local tax inspectors and others are needed.

[caption id="attachment_42503" align="alignleft" width="150"]Punit Goenka Punit Goenka[/caption]

Punit Goenka, MD and CEO, Zee Entertainment Enterprises Limited and President, IBF

It is important that government recognises TV services, which has evolved over the years, as a product/service of mass consumption to be classified and categorised under the item of mass consumption having a GST rate of 5 per cent so that it becomes affordable to masses. Not only does it provide infotainment, entertainment and influence public opinion but unlike the other mediums is also not constricted by level of literacy and is education agnostic. Going by the number of TV households, currently 120 million, we submit to the government that broadcast services, i.e. TV and radio, must be treated on a par with print in the new GST regime. This submission is based entirely on the fact that TV has become an integral part of life for the vast majority in the country and the general economic downturn has impacted the sector extensively.

DD Purkayastha, MD and CEO, ABP Pvt Ltd

I expect a very populist budget this year. As far as the last budget is concerned, it did not have any significant effect on our industry.

[caption id="attachment_76979" align="alignleft" width="150"]Sumeet Narang Sumeet Narang[/caption]

Sumeet Narang, VP, Marketing, Bajaj Auto

One of our biggest expectations is something that kick starts the economic growth and gets it back to where it was till about October. We were seeing a double digital growth in our industry till October last year. We definitely want to see what the budget can offer so that similar consumption comes back to the industry. No major dissatisfaction from last year's budget. The year had started very good for the industry and multiple factors that worked last year helped change the industry.

[caption id="attachment_31751" align="alignleft" width="150"]Manish Sharma Manish Sharma[/caption]

Manish Sharma, President and CEO, Panasonic India and South Asia

The historic budget of 2017 will be a nail-biting affair. While the consumer durable industry awaits to recover from the demonetisation phenomenon, it also anticipates to be placed in the lowest -- 18 per cent slab -- in the upcoming GST reforms. Meanwhile the common man can expect a revision in the lower tax slab rates, indicating higher tax savings. A healthy passbook in turn will further aid in a better lifestyle as consumers will spend more on consumer durables.

Moreover, imposition of a higher basic custom duty on goods will curb imports and promote local manufacturing. Further, clarity on duty differential for mobile handsets will give the necessary impetus to make-in-India under the GST regime.

Kim Ki-Wan, Managing Director, LG Electronics India

The demonetisation move to curtail black money and counterfeit currency was welcomed and appreciated by the industry. Considering the awaited upsurge in tax collections pursuant to the step, we are expecting a fall in individual and corporate tax rates.

The good and services tax (GST) will be the biggest tax reform. The industry is looking forward for the simplified and explicit system. The government should come up with laws that will support the ease of doing business for the industry.

Transportation cost currently is relatively high.

There is a need to remove the anomaly in the inverted duty structure and extend duty concessions on critical components (locally not available) to improve competitiveness.

Anirudh Dhoot, Director, Videocon

With the implementation of GST, we are looking forward to a budget that can help the economy to grow further. We are expecting the upcoming budget to not only address and encourage alternative ways to carry out transactions in order to bring an upsurge in the purchase of goods but also empower the consumer to boost the demand. However, the proposed GST rate of 28 per cent for the consumer electronics and home appliances (CEHA) industry will have a great impact on the product price, leading to an unexpected hike. To address this issue, the industry body Consumer Electronics And Appliances Manufacturers Association (CEAMA) is in touch with the Government. Going forward, we hope the budget will be in favour of the manufacturing industry and encourage Government initiatives such as Make in India and Startup India.

[caption id="attachment_79999" align="alignleft" width="150"]Krishna Rao Krishna Rao[/caption]

Krishna Rao, Category Head, Parle Products Pvt. Ltd.

Owing to the fact that GST is likely to be rolled out from July 1, 2017, we believe that it will have a wider impact in the fast moving consumer goods (FMCG) space as compared to the budget this year. When it comes to the snacking segment, there are certain categories like rusk and namkeen, which are exempted from excise duty. Other categories like biscuits, cakes, chips and confectionery are excisable. The overall tax liability in rusk and namkeen is about 14-16 per cent whereas other categories experience a liability of around 22 per cent. Hence, it would be ideal to exempt biscuits from excise duty and reduce the overall tax liability to significantly less than 8 per cent.

As a result of lower taxation, there will be higher disposable income with consumers both in urban and rural markets. Encouraging consumer sentiments will boost the entire FMCG sector. Focus on rural development: Since encouraging consumer sentiment is critical in the current demonetised market, we also expect increased focus from the government on schemes promoting rural growth with focus on the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA).

The government must allow farmers some additional benefits and access to cashless transactions modes to streamline agriculture and promote overall economic growth. Having made its intent on pushing the use of cashless transactions in the country very clear, we can expect the government to add to the list of cashless transaction incentives in the budget for FY 2017-18. Besides the budget, we are also looking forward to the GST roll out. It will have a huge impact on the economy as a whole and on the FMCG sector in particular.

[caption id="attachment_81040" align="alignleft" width="150"]Neelima Burra Neelima Burra[/caption]

Neelima Burra, Chief Marketing Officer, Cargill Foods India

A lot is expected from this year’s Union Budget for every sector. For the FMCG sector in particular, we expect that the issue regarding the irregular and restrictive tax regime is addressed by the Finance Minister. GST is the keystone to fulfil the vision of one-country one-market, as it can potentially determine barriers in the inter-state movement. There has been a delay in its implementation that has made a few states to capriciously modify the previously agreed upon rates for VAT. Secondly, due to slowdown in rural demand and demonetisation, the FMCG sector has not witnessed growth to its full potential. I hope the Budget takes these into consideration and increases the income tax slab to ensure that consumers have enough disposable income.

[caption id="attachment_78686" align="alignleft" width="150"]Rishi Darda Rishi Darda[/caption]

Rishi Darda, Joint Managing Director, Lokmat Media Pvt. Ltd.

This is the last big budget for the government before the 2019 elections, where they need to balance between populist versus popular. I hope that the upcoming union budget provides a clear roadmap and guidance in terms of economic and fiscal policies. Some expectations: media and entertainment is poised for the next level of growth with digitisation.

There is a need to support the small and unorganised sector that has been hit the most by demonetisation. I would expect our Finance Minister Arun Jaitley to focus on measures that will be a boost for managing individual taxes, self-enterprise, job creation, low-cost housing, education, universal basic income for poor among other areas. Focus on lowering tax rates widens the tax base and in turn increases revenue. Programmes such as ‘Make in India’ and ‘Swachh Bharat’ are great initiatives that need to be sustained. It’s vital to boost consumer investment and consumer demand to uplift the economy, which has been stalled due to demonetisation.

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