Union Budget 2025 offered a significant boost to the overall consumption demand by cutting income tax outgo for individuals and provided a rounded perspective towards inclusive growth. The consumer durables sector has faced challenges in recent months due to softened urban demand, inflation, and liquidity issues, weighing on corporate earnings. While it will endure cautious demand dynamics, overall outlook is bound to turn supportive for the sector from hereon.
Key Budget Proposals and their impact:
Finance Minister Nirmala Sitharaman stated that no income tax till to be payable upto income of Rs 12 lakh annually. Individuals earning up to Rs 12 lakh annually will not have to pay any income tax under the new tax regime as FM gave relief to middle class by raising exemption limit and rejigging slabs. Finance Minister Nirmala Sitharaman said that the middle class gives strength of India’s growth and the Government has periodically hiked the ‘Nil tax’ slab in recognition to their contribution. She said the proposed new tax structure will substantially boost consumption, savings and investment, by putting more money in the hands of the middle class.
Finance Minister Nirmala Sitharaman said in her Budget speech today that the customs duty on interactive and flat panel displays will rise from 10% to 20%, while the duty on Open Cell and related components will reduce to 5%. This increase in customs duty will rectify the inverted duty structure, keeping it in alignment with the government’s Make in India policy.
It will discourage the use of imported panels and encourage local manufacturing of television panels. The announcement is expected to reduce import volumes for IFPD as sales of smart televisions grow rapidly with the market likely to reach roughly $19 billion by the end of this year, according to the Indian Cellular and Electronics Association (ICEA).
Outlook:
The Economic Survey 2025 noted that the domestic production of electronic goods has increased substantially from Rs 1.90 lakh crore in FY15 to Rs 9.52 lakh crore in FY24, growing at a CAGR of 17.5 per cent. It observes, programmes such as Make in India and Digital India, along with improved infrastructure, ease of doing business, and various incentives, have boosted domestic manufacturing and drawn foreign investments. The survey also states that consumer-focused sectors like automobiles, electronics, and pharmaceuticals have emerged as growth drivers. Given the increase in disposable income post the budget, white goods will likely see a good demand push. An immediate effect of this will be seen in the demand of ACs in coming summer season. The expansion of MSME sector benefits, including easier access to credit will also push up demand across a number of consumer durables in semi urban areas.