D2C Industry Expectations from Budget 2022: Invest in Homegrown Start-ups and Reduce Import Duties

Despite the boom, the D2C sector needs to win over certain challenges that will enable the sector to run in an efficient way for a long period of time
D2C Industry Expectations from Budget 2022: Invest in Homegrown Start-ups and Reduce Import Duties

The D2C sector has been one of the most happening sectors for the year 2021. From the sector seeing its first unicorn, Licious, to several brands like boAt, Mamaearth, Wakefit, Country Delight crossing Rs 100 crore of revenue in a short span of time, the developments in the D2C sector are no small deal.

In fact, as per a report, the D2C sector in India will be worth $100 billion by 2025. Currently, it is worth $44.6 billion at the end of the fiscal year 2021 compared to $33.1 billion in 2020. In 2019, the D2C sector had a total valuation of $26.8 billion compared to $20.8 billion in 2018. This suggests how the industry has experienced growth over the years. 

In a D2C (Direct-to-consumer) line of business, products are sold directly to customers, bypassing any third-party retailers, wholesalers, or any other middlemen. This allows the brand to build a direct relationship with a consumer, provide additional benefits, gain direct consumer feedback, and so on.  

Despite the boom, the D2C sector needs to win over certain challenges that will enable the sector to run in an efficient way for a long period of time. With over 500 D2C brands and about 40 becoming unicorns, the level of competition has increased. This has put increased pressure on the supply chain, particularly the last mile aspect of it, and on manufacturing and human resources. The industry thus is eyeing better measures for the sector from Budget 2022 to continue the growth momentum. 

Budget Expectations:

Shilpa Khanna Thakkar, CEO, Chicnutrix said, “The make in India or Be India Buy Indian should be the key focus. India has emerged as a land of opportunities where we are constantly witnessing a lot of start-ups flourishing. Quite a few successful start-ups have been spearheaded by women. There is still a gap of financial support and literacy that becomes an obstacle. Efforts need to be taken to support and mentor these entrepreneurs. Investing in home-grown start-ups and brands will make them more independent. Also, consumption of Indian products will boost the economy and make the grass greener. Investors and government bodies should allocate funding that supports sustainable businesses. With health and wellness taking center stage, there should be a relaxation of taxes on essential wellness products. Encouragement to use wellness and nutrition products will boost the demand which is another factor leading to the growth of start-ups.”

Anika Parashar, Founder, and CEO, The Woman Company stated, “The Union Budget should emphasize Women's wellness - especially menstrual hygiene. We already have tax exemption on sanitary pads, however, this could be extended to manufacturing and production. Further, decreasing import duties for raw materials could bridge the gap between supply and demand as well as encourage more Indian manufacturers to start manufacturing biodegradable pads in the country. There should be policy-level incentivization for Made In India products, start-ups helmed by women, and ventures that focus on sustainability and solving women's issues. The Government should promote the use of biodegradable menstrual products to bring down waste produced by plastic products – a figure which currently stands at a staggering 12.3 billion annually. We also expect the government to improve digital infrastructure in Tier II, III cities, and rural regions so that the next group of consumers can enter the D2C ecosystem.”

READ MORE: D2C Business Model: Is it a Profitable Bet?

Ruchika Bhagat, MD, Neeraj Bhagat & Co. said, “The Union Budget 2022-23 is likely to be shelved on February 1, 2022, by Union Finance Minister Nirmala Sitharaman, and I am hopeful that the upcoming Budget will give the economy a much-needed boost. We are hoping that more money will be spent on capital expenditure and healthcare projects to help India become more integrated into the global supply chain. Sectors such as urban infrastructure, housing construction, and manufacturing could receive further impetus in the budget. Defense, renewable energy, and infrastructure projects are expected to receive more funding. The budget is expected to include incentives for the localization of Defence products and the renewable energy industry, as well as budgetary support or legislative initiatives to encourage the adoption of clean energy.”

Harry Sehrawat, Co-Founder, Sanfe said, “The Union budget should emphasize women being more open about menstrual hygiene and issues as digital media takes the world by storm. With soaring environmental issues, many consumers are looking at eco-friendly alternatives to lessen the potential damage to the environmental climate. We hope that the government will begin their support towards the encouragement of using biodegradable products which will be highly conducive to the reduction of plastic waste in our country. Apart from the exemption of taxes on sanitary pads, changes implemented for import duties would be very beneficial to the expansion and speedy production of these biodegradable products which are possibly the way of the future and will definitely help the menstruating population of the rural regions as well as the economically backward sections of our country.”

Vijayraghavan Venugopal, Co-Founder, Fast&Up said, “The funds issued by the government in last year’s Union Budget saw increased spending on healthcare by 137 percent with allocation to the healthcare sector at Rs 2.23 lakh crore through the PM Atmanirbhar Swasth Bharat Yojana. This year too, we expect a substantial increase in this percentage for the healthcare sector as this will have an overall impact on the economy. We look forward to reduced GST on homegrown healthcare products and companies by keeping a low GST bracket on immunity-boosting products. There should be economic incentives in the form of endowment funds and providing tax relief. Overall, we hope that the spending on the healthcare sector goes up to more than 2.5-3 percent of the GDP.”

Sahil Dharia, Founder & Chief Executive, Soothe Healthcare said, “To promote Make in India, the government should encourage more investment in the non-Tech companies. Right now, capital is increasingly being deployed towards Tech companies majorly Fintech.  Government investments via e.g SIDBI serve the purpose of crowding capital into a sector that is already getting more than sufficient attention.  Indian entrepreneurs need this support to shift the materials supply chain from China and sell products not only via the internet economy but also offline for easy access to a large population residing in the hinterland of Bharat.”

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