Industry executives say focus on MSMEs, manufacturing and logistics will support incomes over time but leaves consumption recovery gradual
The Union Budget has signalled a clear shift away from short-term consumption stimulus towards job creation, manufacturing expansion and supply-side reform, indicating that any recovery in consumer demand is likely to be gradual rather than immediate. Industry leaders across consumer goods, retail and manufacturing said the policy direction prioritises income generation through employment and industrial growth over direct measures to boost household spending.
While expanded support for MSMEs, agriculture and logistics is expected to strengthen purchasing power over time, companies do not anticipate a near-term surge in discretionary consumption. Instead, businesses are preparing for a slow, uneven recovery led more by rural and value segments than urban premium categories, industry experts said while speaking with BW BusinessWorld.
“There are no big announcements or big reforms. It’s very progressive and largely focused on sustaining growth…The idea is to ensure that we remain resilient and we continue growing at this pace,” said Mayank Shah, Vice President, Parle Products, adding that we repeatedly returned to the budget’s deliberate avoidance of short-term populism.
Shah said the government appeared focused on consolidating India’s growth trajectory rather than accelerating it through headline-grabbing tax cuts or giveaways. “What we’ve seen is technical things which would ensure that we consolidate and we sustain our growth,” he said.
Jobs Before Consumption
Experts said the government is relying on employment generation as the main channel through which consumption will eventually revive. The budget’s emphasis on manufacturing expansion, MSME financing and sector-specific incentives is aimed at creating income streams rather than directly boosting spending power. Experts noted that this approach may take longer to translate into demand but could prove more sustainable.
Shah pointed to multiple initiatives aimed at generating jobs, ranging from SME funding of Rs 10,000 crore, to electronics manufacturing whose allocation have increase from Rs 22,000 crore to Rs 40,000 crore in current budget to production-linked incentives across textiles, chemicals, biopharma, rare earths and semiconductors.
“All of these things are going to generate employment and it’s going to help put more money in the hands of consumers, which is going to result into better demand for FMCG and food products,” he said.
He added that reforms in agriculture and allied sectors could further stabilise rural incomes and input costs. “The agri and allied sector reforms will ensure that we have stability in input prices and and we are able to, we as manufacturers, are able to, you know, ensure stable prices, which would further accelerate the demand.”
MSMEs Emerge As Boost To Clear Supply
Smaller companies and emerging consumer brands expect the most immediate benefits of the budget to come from improved access to credit and working capital. Policy measures aimed at strengthening financing channels for MSMEs were widely viewed as a structural positive for business expansion.
“As a startup and as an MSME, I think the budget has done a lot of good things for us, especially on the supply side. The creation or increasing of the credit guarantee scheme from 10 crores to 20 crores, , guaranteeing the invoice discounting… is really going to help startups like us,” said Sanket S, co-founder, Scandalous Foods.
He said provisions supporting invoice discounting and receivables securitisation could make it easier for young firms to access bank and NBFC funding. However, Sanket cautioned that improved business liquidity does not automatically translate into stronger consumer demand. “I don’t think there has been more money put in the hands of the consumers,” he said, cautioning about the demand outlook, noting that infrastructure-led income growth would take time to translate into spending.
Beauty and Wellness Bet On Skilling Push
The beauty and wellness industry sees the budget’s focus on skilling and service-sector employment as a long-term growth enabler. Industry players said workforce development could address chronic shortages of trained professionals, particularly in salons and personal care services.
“The biggest win that we see is the recognition of the orange economy, where our skilled hairdressers, beauticians and stylists will now be getting a lot of focus,” said Ankit Virmani, Director at Esskay Beauty India, referring to plans to train 1.5 lakh caregivers and wellness professionals.
He said chronic skill shortages had long constrained growth in the salon industry. Despite having a very large population, the skilled manpower in our sector is still the biggest headache.
He noted that skill gaps have constrained sector expansion despite strong consumer interest. Virmani also said compliance simplification could encourage informal businesses to formalise. “A lot of MSME salons would then try to become mainstream, which currently a lot of them are very scared of,” he said.
Premium personal care and lifestyle spending is expected to remain relatively resilient, driven by younger consumers’ focus on grooming, wellness and experiences. Virmani added that changes in tax collection at source on overseas travel and higher duty-free limits could support outbound travel-linked purchases.
However, not all discretionary categories are expected to recover at the same pace. Sanket said food service and indulgence-led consumption may take longer to rebound. “The government has solved the problem of the kitchen, but not sure if they’ve solved the problem of the dining room,” he said.
Long-Term Strategy, Gradual Payoff
From a broader industry perspective, the budget was seen as reinforcing a long-term structural growth strategy. Experts said the government has clearly prioritised economic fundamentals over short-term demand support.
“The biggest takeaway for me from the union budget is a government’s clear agenda of moving from short term consumption stimulus towards strengthening the core fundamentals that can sustain growth over a period of time,” said Naveen Malpani, Partner and Consumer and Retail Industry Leader, Grant Thornton Bharat.
He cited manufacturing incentives, regional development spending and a Rs 10,000 crore MSME fund as signals of a strategy focused on employment and business stability. Large investments in logistics could gradually reduce operating costs for consumer companies, he added.
“There is an outlay of nearly 12.2 lakh crores on the overall logistics development within the country,” he said, noting that lower logistics costs could eventually improve margins and pricing for consumer companies.
Rural Likely To Lead
Experts said that consumption trends diverge geographically as income drivers vary between urban and rural markets. Rural areas could benefit more quickly from farm-linked income measures and employment schemes, while urban recovery may depend on services-sector momentum.
Shah said earlier tax changes were already supporting urban disposable incomes and that GST-related benefits could become more visible in the next fiscal year. At the same time, he maintained that rural consumption could grow at a relatively faster pace.
At the same time, Shah said rural India could see relatively faster growth due to targeted income-support measures. “We would largely be seeing consumption increasing in the rural part,” he said, though he added that urban markets would not lag significantly.
Malpani agreed, saying aspiration and digital connectivity were reshaping demand patterns. “From a consumption perspective, I think the tier two, tier three, and I would say the rural Bharat is the place to go from the volume perspective,” he said.
A Budget Built For Patience
Industry leaders broadly agreed that the budget’s impact on consumption will unfold over time rather than deliver an immediate boost. Structural investments in manufacturing, skilling, MSME support and logistics are expected to strengthen the economic base, but the transmission to household spending will be gradual.
“The impact on consumption may not be immediate,” Malpani said, “but definitely the whole infrastructure that is getting created will help from a growth perspective.”
For consumer-facing businesses, the near-term focus is likely to remain on cost control, rural expansion and value-led offerings, while waiting for income growth to translate into a broader and more durable demand recovery.
