India’s FMCG sector is one of the biggest contributors to the country’s consumer appetite. However, there has been a considerable slowdown in the sector as a whole recently. Factors like food inflation have led to a 15% decline in the average consumption pattern in lower-income urban consumers. This is just one of the changes the sector has seen in the last quarter. Rural consumption has shown an increase in consumption with a 3% increase in tractor sales and 10% in three-wheeler sales. This points towards a considerable rural economic revival.
The growth of quick commerce platforms like Zepto and Blinkit saw an 8% rise among the urban crowd. Even Tier 2 cities play a 30% role in the overall sales of these platforms. This however has led to a 12% decline in revenues as reported by the Confederation of All India Traders (CAIT).
All of this combined makes the Union Budget 2025 announcements and provisions even more crucial for the sector and to sustain its growth.
Introduction
India’s retail industry accounts for more than 10% of the country’s GDP, and the sector has seen considerable growth because of the entry of several new players. The country’s retail space earned the 63rd rank in the World Bank’s Doing Business 2023, making it the 5th largest retail destination.
With the growth that the retail industry has witnessed in recent times, it is expected that in 2032 it will reach a whopping US$ 2 trillion in value, according to a recent report by the Boston Consulting Group (BCG).
The Union Budget 2025 is expected to help the retail sector achieve this target and help it maintain its contribution percentage to the country’s GDP.
Key Announcements for the Retail Sector
The Union Budget 2025, under FM Nirmala Sitharaman, saw significant announcements being made for the retail sector. Here’s everything you need to know about what the Union Budget 2025 had in store for the sector.
Government Initiatives and Reforms
Implementation of measures by launching a product scheme to enhance productivity and quality of India's footwear and leather sector.
Focus on improving design capacity, machinery and component manufacturing for leather-based products and non-leather footwear.
Expansion of the national action plan for toys by implementing a new scheme to reduce import dependence and encourage local production.
Establishing clusters, skilling initiatives, and an environment to build sustainable production.
Special attention to innovative and high-quality toy manufacturing under the 'Made in India' brand.
Establishment of the National Institute of Food Technology, Entrepreneurship, and Management in Bihar.
Extension of support to the fruits and vegetable sector to align with the growth in health consciousness among consumers.
Establishment of a six-year mission for Aatmanirbharta in pulses focused on toor, urad, and masoor dals.
Focusing on a national mission for high-yield seeds.
Establishment of a Makhana Board in Bihar while recognizing the crop as one with high potential.
Impact Analysis of Budget 2025 on the Retail Sector
With the announcements that the industry saw as a part of the Union Budget 2025 under Finance Minister Nirmala Sitharaman, the sector is undoubtedly going to be a witness to many developments. Let us have a look at some of them.
Positive Developments for the Sector
This initiative is expected to generate Rs 400 crore in revenue.
It is projected to create employment for 22 lakh people.
The sector aims to achieve exports worth Rs 1.1 lakh crore.
Making India a global hub for toy manufacturing
The establishment of the National Institute of Food Technology, Entrepreneurship, and Management in Bihar. will enhance farmers' incomes by adding value to their produce.
The institute will create opportunities for skilling, entrepreneurship, and employment for youth.
Increase in agricultural productivity with high-yield seeds.
Boost the production, processing, value addition, and marketing of Makhana.
Comparison with Budget 2024 Provisions
Some of the provisions from the Union Budget 2024 included:
Steps taken to improve rural development, manufacturing, skilling, etc to uplift the sector and help achieve sustainable growth.
The government allocated ₹1.52 lakh crore for agriculture and allied sectors
Five schemes and initiatives were introduced to improve employment opportunities and the participation of women in the workforce.
The proposal to introduce three schemes to provide employment-linked incentives
Future Outlook for the Retail Industry Post-Budget 2025
Some of the main impacts that the proposals can have on the sector include:
One of the major impacts that the announcements will have in the retail sector is the increase in employment.
Establishment of India as a global hub for toy manufacturing
Continued increase in agriculture productivity with high-yield seeds.
Global recognition of Makhana as a healthy, food product and the establishment of India as a global leader in its production.
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