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Stocks of fast-moving consumer goods companies are seen reacting to provisions made for the industry in the upcoming Union Budget for 2013-14 (Apr-Mar), which will be presented on Feb 28. The FMCG industry expects some reduction in indirect taxes, which would increase the purchasing power of consumers. The industry also wants to see a clear roadmap for Goods and Services Tax implementation in the budget.
Shares of ITC, the country's largest cigarette manufacturer and the biggest stock on the BSE-FMCG index, are expected to be especially dependent on tinkering of excise duty on cigarettes in the budget. While a 0-5% increase in excise duty on cigarettes is expected to be implemented in the budget, a rise of over 5% in this duty will affect ITC's earnings in the long term, and could affect its cigarette sales volumes. There is a need to further increase import duty on crude and processed palm oil, because low import duties in India lead Malaysian and Indonesian governments to introduce export duty on these products, Adi Godrej, chairman, Godrej Consumer Products, said. Raising import duty on these products would add to the government's coffers and aid in balancing the budget, Godrej added. Such a move could have a negative bearing particularly for shares of Hindustan Unilever, the country's largest palm oil importer. In January, the government raised the base import price of crude palm oil,
