Budget 2020: Interiors industry has lot to do

Budget 2020: Interiors industry has lot to do, and much to grow

Representative image. (Getty images)

By Tanuj Choudhry

While the stock market has been doing well, the Indian economy has hit a rough patch, and is the slowest it has ever been.

The home interiors industry works on consumer sentiment. The good news is that consumers still want to invest because it is an essential purchase for those moving into new homes. The downside is that consumers may not be in a position to buy a home. Due to the impediments that arise from the tax and regulatory environment, consumers are facing issues around affordability and liquidity. Perhaps, more can be done to meet the multiple challenges faced by homebuyers and real-estate developers. In the current scenario, Section 80C of the Income Tax Act does not provide for a focused benefit on housing.

There are multiple investment alternatives for taxpayers, but the lack of exclusive tax benefits on the principal amount of home loans forces them to defer home purchase decisions, thus impacting sales.

Owning a home is a basic human need and not a luxury. Home interiors is an essential part of owning a home, and therefore it is integral to consider home interiors at 12% GST slab instead of 18%. This will help in boosting demand alongside the much-anticipated change in income tax slabs. There needs to be more liquidity for homeowners to be able to spend more since personal income tax rates alone will not aid affordability for the consumer.

Another major cause for worry is the higher import duties imposed on paper and other input materials. This is mainly a concern for the home design and décor segment since paper is crucial for making products like laminates. If we want to have a ‘Make-in-India’ stamp, then the costs of getting quality material should be contained. While there is a need to revive our economy, import duties on many needs to be re-considered.

The home decor and interiors industry in India is in high demand. It has moved from being the sole preserve of the rich. Interior design has made rapid inroads into the booming urban Indian middle class over the last five years. This has also coincided with the share of organized retail in this space doubling from 5% to 10% in the same period. For a $20BN market with an 8% CAGR, this is significant even as these are still early days. This sector has much to do, and a lot to grow.

(Tanuj Choudhry, Chief Business Officer, HomeLane)