FMCG industry seeks GST implementation by Apr '10

The Rs 82,000 crore Indian FMCG industry is primarily seeking the implementation of the GST (Goods and Services Tax) by April 1, 2010 in the upcoming Union Budget. Industry captains expect fiscal measures that will spur growth of the FMCG sector in rural as well as urban India.

Adi Godrej (GODREJCP.NS : 278.7 +2.6), chairman of the Godrej Group expects the withdrawal of the FBT in the Union Budget 2009. Godrej's wish list also includes reduction of the CST from 2% to 1%." My expectations for the Budget proposals and pronouncements for the FMCG sector include, continuation of the current excise duty, implementation of the GST by April 1, 2010 and re-imposition of import duty on edible oils," he added.

Like Godrej, Sunil Duggal, chief executive officer of Dabur India (DABUR.NS : 153.3 +1.75) strongly recommends the withdrawal of FBT in the upcoming Budget. According to Duggal, the government should continue with the policy of providing financial stimulus to rural sector in India." The government should also chart out a clear map for the implementation of GST," he said.

Sharing similar sentiments, Harsh Mariwala, chairman and managing director of Marico Ltd (MARICO.NS : 102.65 +2.65) said the industry expects the roll out of GST by next year. "This move will certainly stimulate growth in the Indian FMCG industry," he said.

According to Nadia Chauhan, joint managing director, Parle Agro Ltd, at a macro level, the FMCG industry needs a larger impetus for the improvement of infrastructure in the country." The areas of priority are water, power and roads to facilititate growth for industry. At present, farming industries do not have sufficient power to run their operations. We need proper allocation of funds to improve the state of roads and transport in the country," she added.

According to a market strategy survey report by ICICI (ICICIBANK.NS : 848.55 +3.9) Securities, analysts are optimistic about the prospects of FMCG sector going forward. With the economy growing at a rapid pace and organized retailing making greater inroads, ISEC analysts expect the domestic FMCG industry to garner huge benefits from the same.

"Further FMCG companies in last few years have systematically spread there network in rural areas, with this ongoing thrust we expect these companies to make deeper penetration in rural areas and increase its customer base and expand volumes. We expected the Budget impact to be positive for the industry," said an analyst with Isec.