Budget 2012: FMCG goods to become costlier

Press Trust of India
Mar 16, 2012 at 10:59pm IST

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Mumbai: The FMCG industry on Friday said they will be forced to increase prices even though sales are already muted and margins are under immense pressure.

Finance Minister Pranab Mukherjee increased excise duty to the pre-crisis level of 12 per cent from 10 per cent.

"I expect this Budget to have a slightly inflationary effect due to the cascading effect of companies passing on the excise duty increase to consumers," Godrej Consumer Products Managing Director A Mahendran said.

Budget 2012: FMCG goods to become costlier

Finance Minister Pranab Mukherjee increased excise duty to the pre-crisis level of 12 per cent from 10 per cent.

Marico Group Chief Finance Officer Milind Sarwate said, "the impact on Marico is somewhat negative, as the increase in the excise duty will push up cost."

Expressing similar sentiment, Dabur Chief Executive Sunil Duggal said, "the hike in standard excise duty is being seen as highly inflationary steps that may hurt consumerism."

Concurring with them, Emami Chief Executive NH Bhansali said "the excise duty hike will severely impact manufacturin sector."

However, Britannia Managing Director Vinita Bali said the steps introduced in the agriculture sector will lead to increased demand and consumption.

"A few of the positives of the Budget include raising the plan outlay for agriculture by 18 per cent, initiatives for R&D in farm sector, allocations for improving warehousing and storage facilities for agricultural produce," Bali said.

She added that all these executed well and on time, will address the supply side on food and agriculture that will drive domestic demand and consumption, which is one of the key priority areas.

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