The positive outlook in the FMCG and Non-Consumer Durables sectors after Budget 2025 comes from several new steps that are expected to boost incomes and spending in both rural and urban areas. Below are some of the key points behind the rise in FMGC and Consumer Durable Stocks after the announcement of Budget 2025.
Tax Cuts and Higher Disposable Income
- More Take-Home Pay
- The Income Tax Exemption Limit has been raised to ₹12 lakh, giving middle-class families more money to spend.
- The Standard Deduction has been increased to ₹75,000, leaving extra cash with urban and salaried consumers.
- Simpler GST Rules
- GST on many everyday FMCG items (such as packaged foods and personal care products) has been lowered from 18% to 12%, which should help lower prices and boost sales.
- The GST setup for products like popcorn has been simplified to reduce paperwork and make compliance easier.
Boosting Rural Demand
- Increased Rural Spending
- A sum of ₹2.66 lakh crore has been set aside for rural development projects like PM Gram Sadak Yojana and MGNREGA, which is expected to raise incomes and improve connectivity in rural areas.
- Direct Benefit Transfers have been widened to support income from both farming and non-farming sources.
- Support for Agriculture
- The introduction of 109 high-yield, climate-resilient crop varieties is expected to help farmers increase productivity.
- States will receive ₹1.5 lakh crore in interest-free loans to improve rural infrastructure.
Rise in Urban Spending
- Job and Housing Support
- Additional funds are being directed to urban housing projects under PM Awas Yojana Urban 2.0 and to job creation schemes, which should boost spending in cities.
- There is also a focus on growing the services sector to create more urban jobs.
- Premium Product Trends
- Urban companies, such as Nestle and Godrej Consumer, are set to benefit from increased demand for higher-end products.
- Tax breaks for home loans and rental properties are expected to drive spending in the urban real estate market.
Changes in Specific Sectors
- Relief on Input Costs
- Exemptions on customs duty for 36 essential drugs and lower rates on others will help cut costs for healthcare-related FMCG items.
- Steps are being taken to control price increases in raw materials like palm oil and wheat, helping to keep overall costs stable.
- Stock Market Reactions
- Shares of FMCG companies such as HUL, Dabur, and ITC saw gains between 1% and 7% after the budget, with expectations of a 6–8% rise in sales volume thanks to better rural income and tax cuts.
- Experts predict a 7–9% growth in the sector for FY25 as rural spending picks up and new ideas enter the market.
Overall Economic Impact
- GDP and Spending: With a 5–7% increase in disposable income, FMCG spending is expected to grow by about 6%, contributing an additional 0.7% to the GDP.
- Market Confidence: The Nifty FMCG index increased by 2,006 points after the budget, showing strong investor trust.
Top Stocks to Watch
| Company | Focus Area | Expected Benefit |
| HUL | Rural and Urban Markets | Gains from rural improvements and premium trends |
| Nestle India | Primarily Urban (75% revenue) | Benefit from increased disposable income |
| ITC | Agriculture and FMCG | Support from rural projects and stable tobacco tax |
| Marico | Mass-Market Products | Advantage from lower GST on edible oils |
The focus on increasing incomes in rural areas and providing tax relief for urban consumers is expected to drive a recovery in the FMCG and NCONSDUR sectors, aligning with the broader plan for economic growth in India.
