India Budget: will tax relief measures flood money into hospitality?
New policies announced in India's latest budget spell good news for the country's food and beverage sector as tax relief measures will give the middle classes more disposable income to spend on luxury. The post India Budget: will tax relief measures flood money into hospitality? appeared first on The Drinks Business.
New policies announced in India's latest Budget spell good news for the country's food and beverage sector as tax relief measures will give the middle classes more disposable income to spend on luxury.
Indian Prime Minister Narendra Modi's coalition government has unveiled its first full-year Budget.
Finance Minister Nirmala Sitharaman announced tax relief measures as part of the changes being implemented. The measures are designed to counter slowing growth, rising prices and flagging consumption among the middle class in Asia's third-largest economy.
The government has raised income tax exemption limits, making earnings of up to 1.2m rupees (£11,051) - excluding special rate income like capital gains - entirely tax free.
The news will be a major relief to millions of taxpayers and businesses alike, as it goes some way to increasing disposable income for India's middle class and is likely to encourage higher consumer spending.
Sagar Daryani, President of the National Restaurant Association of India and co-founder of Wow! Momo, told the Times of India that the restaurant sector has struggled with declining footfall in the past year. "But now, there is going to be extra cash in people's hands. With the higher tax exemption limit and the general tax reliefs, we expect to see more of the middle class dining out. With increased footfalls across malls and restaurants, profitability of businesses will improve, spurring job creation," he said.
Amar Sinha, Radico Khaitan CEO, said the boost to discretionary spending would benefit alcohol producers as well as the on-trade. "As disposable incomes rise, consumers are more inclined to indulge in premium experiences, fuelling a demand surge for quality products," he said.
Radico Khaitan is one of India’s largest liquor companies. In January it reported a 27% rise in third-quarter profits thanks to success in its premium segment.
Revenue grew 24.7% for the company’s premium segment in the third quarter, significantly higher than the 15% revenue growth for the regular segment.
Kalyan Krishnamurthy, CEO of Flipkart Group, said the tax relief for the middle class and streamlined tax collection norms are significant moves that will "put more power in the hands of consumers, boosting their purchasing capacity and access to a wider range of quality products."
However, industry experts did criticism some elements of the Budget in India saying they did not go far enough. The National Restaurant Association of India's Daryani expressed disappointment that input tax credit had not been extended to the restaurant industry. "It's much needed to reduce the high mortality rate in the industry - over 50% of restaurants shut down within the first 24 months," he said.
Indian Prime Minister Narendra Modi's coalition government has unveiled its first full-year Budget.
Finance Minister Nirmala Sitharaman announced tax relief measures as part of the changes being implemented. The measures are designed to counter slowing growth, rising prices and flagging consumption among the middle class in Asia's third-largest economy.
The government has raised income tax exemption limits, making earnings of up to 1.2m rupees (£11,051) - excluding special rate income like capital gains - entirely tax free.
The news will be a major relief to millions of taxpayers and businesses alike, as it goes some way to increasing disposable income for India's middle class and is likely to encourage higher consumer spending.
Sagar Daryani, President of the National Restaurant Association of India and co-founder of Wow! Momo, told the Times of India that the restaurant sector has struggled with declining footfall in the past year. "But now, there is going to be extra cash in people's hands. With the higher tax exemption limit and the general tax reliefs, we expect to see more of the middle class dining out. With increased footfalls across malls and restaurants, profitability of businesses will improve, spurring job creation," he said.
Amar Sinha, Radico Khaitan CEO, said the boost to discretionary spending would benefit alcohol producers as well as the on-trade. "As disposable incomes rise, consumers are more inclined to indulge in premium experiences, fuelling a demand surge for quality products," he said.
Radico Khaitan is one of India’s largest liquor companies. In January it reported a 27% rise in third-quarter profits thanks to success in its premium segment.
Revenue grew 24.7% for the company’s premium segment in the third quarter, significantly higher than the 15% revenue growth for the regular segment.
Kalyan Krishnamurthy, CEO of Flipkart Group, said the tax relief for the middle class and streamlined tax collection norms are significant moves that will "put more power in the hands of consumers, boosting their purchasing capacity and access to a wider range of quality products."
However, industry experts did criticism some elements of the Budget in India saying they did not go far enough. The National Restaurant Association of India's Daryani expressed disappointment that input tax credit had not been extended to the restaurant industry. "It's much needed to reduce the high mortality rate in the industry - over 50% of restaurants shut down within the first 24 months," he said. 
