The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley departs from North Block to Rashtrapati Bhavan and Parliament House, along with the Minister of State for Finance and Shipping, Shri P. Radhakrishnan, the Minister of State for Finance, Shri Shiv Pratap Shukla and the senior officials to present the General Budget 2018-19, in New Delhi on February 01, 2018.

Trending Now

Union Budget 2018: The good, bad and ugly for the luxury sector

2 Feb , 2018  

BlackBook talks to top players to find out how the Arun Jaitley’s populist budget will impact the industry


Shikha Talwar


With a pro-farmer and Make in India bent, the Union Budget 2018 laid the ground for the 2019 elections. However, the luxury industry has been left wanting for significant contributions towards its burgeoning landscape.

While homegrown luxury brands are pleased with a 10 per cent reduction in GST, the increased cess on foreign players has met with criticism.

The real-estate segment also feels ignored.

Luxury cars, bikes, smartphones, cosmetics, jewellery, watches, furniture and televisions are set to become more expensive. At a time when industries are still reeling from the aftermath of GST, this further hit makes the near future seem bleak.

BlackBook reached out to key players to deconstruct the likely impact of the 2018 Budget 2018.

Real Estate: The government has announced a dedicated Affordable Housing Fund


real estate


“The real estate industry welcomes the initiative of setting up of a dedicated fund for affordable housing. A major push on highway development and inner-city rail networks (Mumbai, Bangalore) will give the necessary impetus to real estate development.  Further push to UDAAN (56 new airports), development of 600 + new railway stations will mean better connectivity to smaller towns spurring real estate development beyond metros. The industry is, however, disappointed with no changes in income tax slabs or GST slabs, translating to no extra benefit to new home buyers especially in metro markets. Another miss is also the lack of provision of full industry status to real estate, crimping flow of affordable funds”.

– Narasimha Jayakumar, Chief Business Officer, 99Acres

“There has been a silence in the budget on stimulating mainstream real-estate demand. The sector, grappling with the reforms-driven new order, has been bereft of any meaningful interventions that could have been achieved through the budget.”

– Shishir Baijal, Chairman & Managing Director, Knight Frank India

Automobile: An increase in the import duty of auto parts, accessories and varying from 5% to 10%, clubbed with the new Social Welfare Surcharge at 10% has been introduced


The new Lamborghini Urus

The new Lamborghini Urus


“For the luxury auto sector, the Union Budget is disappointing and is against the spirit of partnership. As manufacturers, we have a core social responsibility towards our workforce and the dealer network. Increase in custom duty and introduction of Social Welfare Surcharge in lieu of an education cess (which is higher than the erstwhile cess), is going to definitely affect the prices again, which will further confuse the customer. The market sentiment had only recently become stable after the introduction of GST cess. The budget clearly lacks a focus towards the luxury auto industry, which otherwise would have given us a better clarity to plan our strategy for the India market for short and long term.

While, as luxury car manufacturers, we are undertaking several investment initiatives to make the dream of owning a luxury vehicle more realistic for all, we also expect the government to support this industry.”

– Rahil Ansari, Head, Audi India

“The Union Budget 2018 is not favourable for the growth of the luxury auto sector. The market sentiment had only recently become stable after the introduction of GST cess, and now the additional cess will further impact the growth of the luxury auto sector. The budget definitely needed an inclusive view for the luxury automobile industry which would have helped the industry to recover in the coming years.

– Sharad, Agarwal, Head, Lamborghini India

Fashion & Beauty

  • Textile: The FM has allocated Rs 7,148 crore for the textile sector

The allocation is helpful but the real issue for the textile industry is lack of skills, high cost of capital and low focus on start-ups. For start-ups, it would have been better to make some amendments to the Angel tax. We already have schemes such as the ROSL or TUFTS to support export trade. However, we have nothing significant to support the Indian growth saga. Certainly more could be done for the sector, one of the largest source of employment.

– Aditya Singhal, Founder & CEO, IML Jeans Co.

  • Cosmetics: Custom duty on cosmetics to be raised by 10 per cent




“The customs duty hike could impact the sector negatively, but the exact implications will have to be understood once we know the policy details. On the other hand, with reduced and simplified GST on cosmetics, the industry is upbeat and looking forward to policies that facilitate business. We are optimistic of growth-enhancing measures for the beauty sector and expect positive changes in the overall economic scenario.”

– Shriti Malhotra, Chief Operating Officer, The Body Shop India

  • Footwear: Employment-based tax incentives to be extended towards footwear and leather industry




“The footwear industry is in a recovering phase after a slow 2017. Growth was stagnant after demonetisation and GST. I believe that the budget could have been better for our industry; in the current scenario it would be difficult to for the footwear sector to rebound sales.”

– Ishaan Sachdeva, Director, Alberto Torresi

Jewellery: Import duties on diamonds and gemstones increase from 2.5 per cent to 5 per cent


Image courtesy: Aisshpra Gems & Jewels

Image courtesy: Aisshpra Gems & Jewels


“We are happy that corporate tax has been reduced to 25%. However, since turnover cap has been placed, it won’t be applicable to us. Capital gain on equity shares and no changes in individual tax slabs means that the post-tax income of individuals will go down. Moreover, an increased cess to 4% will lead to higher gold prices and hence hamper sales. Overall, the budget was slightly negative for us.”

– Vaibhav Saraf, Director, Aisshpra Gems & Jewels

“The gems and jewellery industry has been given a major boost pre-budget by reducing GST on loose diamonds and coloured stones from 3% to .25%. The reduced corporate taxes for MSMEs with turnover up to 250 crores will spill over advantages into retail sectors. However, the rise in custom duties on diamonds & gemstones from 2.5% to 5% is a point of hindrance to the industry”.

– Tanya Rastogi, Director, Lala Jugal Kishore Jewellers

Hospitality: No relief from the existing GST


AD Singh’s Olive Bar & Kitchen

AD Singh’s Lady Baga, a Goan restaurant in Mumbai


“The Restaurant Industry was eagerly awaiting the re-introduction of Input Tax Credit (ITC) for restaurants. Ours is the only industry which does not receive this benefit. We have also been requesting a uniform policy with a Single Window Clearance and a reduced number of operating licenses for restaurants. We are an industry worth Rs 3,52,000 crore which is expected to grow to Rs 5,52,000 crore by 2022. It is disappointing to see that no specific announcement was made.”

– Rahul Singh, President, National Restaurant Association of India (NRAI)

Make in India: 10 per cent reduction in GST and Corporate tax rate reduced to 25% for companies with turnover of up to Rs 250 crore




“The intentions to promote Make in India have clearly been showcased. Jaipur Watch Company, a proudly made Indian brand, is happy with the outcome of doubling the duty on imported watches. This will help boost local brands like ours.”

– Gaurav Mehta, Founder, Jaipur Watch Company

“The reduced corporate tax for MSMEs will allow us to invest a higher portion of our profits towards fueling future growth.”

– Ankit Vora, Vice President-Finance, Bombay Shirt Company

“More than 85% of OnePlus smartphones sold in India are produced locally, since Make in India was announced. This is a fortunate time for us to introduce the next set of regulations to attract investment in the manufacturing sector and establish India as a global hub for electronics.

– Vikas Agarwal, General Manager, OnePlus India

Cryptocurrency: The government will take measures to eliminate the use of crypto-assets




“The status of the legal framework around treatment of cryptocurrency remains as status quo. The Finance Minister in his speech in budget today has reiterated earlier statements that cryptocurrency shall not be treated as legal tender. The legal framework on buying and selling of crypto on various exchanges remains ambiguous for users and exchanges. There is no framework on the mining of crypto currency either. Whether indirect tax shall apply on buying and selling of cryptocurrency also remains unclear.”

– Advocate Kanishk Agarwal, Founder, CriTaxCorp

“I believe the government is failing to understand that cryptocurrencies are not just about speculation and trading. Many cryptocurrencies such as Ethereum have a strong use case, especially for developing economies like India. We have to adopt a dynamic approach that evolves with the markets.

GST can be taken as an example—it changed dynamically with market response.”

– Kumar Gaurav, Founder & CEO of Cashaa (a blockchain-powered forex platform)


, , , , , , , , , , , , , , ,

One Response

  1. WONDERFUL Post.thanks for share..more wait .. ?

Leave a Reply

Your email address will not be published. Required fields are marked *