A flat tax rate for online gifts, a reduction in GST on bakery products, and more money in the hands of the consumer, Pawan Gadia, Global CEO, Ferns N Petals shares his Budget 2023 wishlist
Over the years, the business of gifting has grown by leaps and bounds, thanks to the young demographics in India that is heavy on gifting and splurging on special occasions. Consulting agency Technopak estimates the size of the Indian gifting industry to be about Rs 250,000 crore.
Now, the industry itself is expecting some gifts in the upcoming budget in the shape of some sops that would help the sector grow further.
“Gifting is expected to grow faster in the coming months as disposable incomes grow, people migrate for jobs, and occasions multiply,” said Pawan Gadia, Global chief operating officer and director, Ferns N Petals (FNP) sharing his budget expectations.
Budget 2023 wishlist
Gadia feels that the upcoming Budget should have policies or tax cuts that will help increase the disposable income of consumers.
“An increase in the income tax exemption slabs on individual taxes will allow the consumer to have more money in hand to spend on gifts for their loved ones,” he said, echoing retail industry sentiments.
Also included in his Budget 2023 wishlist is a separate flat Goods and Services Tax (GST) rate on gifting. “A separate tax rate or a uniform GST rate of 5% on online gifts would be very welcome,” he said. Currently, while there is no GST on flowers and plants as gifts, other online gift products are taxed at different GST rates, depending on the category they fall in.
Since it was launched in 1994 by Vikaas Gutgutia, FNP has grown from a simple bouquet gifting and delivery service to a full-fledged gifting company that sells flowers, cakes, plants and other gift items through 450 outlets across 150 cities in India. It also delivers to 120 countries and has offices in Singapore, Dubai, UAE and Qatar.
Today, FNP sells approximately 5,000 cakes per day. It even has its own chain of bakeries. Launched in 2017, FNP Cakes has 160 stores that sell cakes, cookies and other bakery items.
Cakes, being a major category for FNP, Gadia hopes for a reduction on taxes related to edibles “We are hoping for some reduction in the GST of bakery products and other edibles to 5% from the current 18%,” he said.
The company stands to benefit from any reduction on the above as it has aggressive expansion plans for the format. “Considering the phenomenal demand for cakes as gifts, we have plans to grow FNP Cakes to over 250 stores by end 2023,” said Gadia.
Focus on the next metros
Not just for its cake store chain, the company is also accelerating its efforts to take FNP stores to tier-2 and tier-3 towns. The current destinations on its expansion roadmap include Panipat, Kozhikode, Gorakhpur, Kanpur, Lucknow, Bhilai, Ranchi, Chattisgarh, Surat, Dibrugarh, Nasik and Puri—places which are upcoming metros.
Trends and challenges
Speaking about the trends for 2023, he said that the gifting market in India is changing. “Personal gifting as a culture is on the rise, with the number of gifting occasions increasing from Anniversaries, Weddings, Birthdays, Valentines’ Day, Rakhi, to Mother’s Day, Father’s Day and so on,” he said in reply to a WhatsApp query.
Giving more insight into the changing nature of gifting, Gadia said that today consumers want to buy gifts from stores that are unique, stylish, personalized, and that reflect their status.
He added that there is a huge scope for companies which can deliver on the above.
In recent times, margins have suffered due to an increase in the cost of servicing an e-commerce gifting order owing to a variety of factors. These include a rise in minimum wages and prices of fuel and raw materials including consumables and eatables components. Furthermore, the weakening demand for regular online products and consumers’ preference for value for money are posing serious challenges for businesses, which are struggling to meet bottom-line targets. In this scenario, “uniqueness in product and experience of the customer is the only answer to sustain in this tough market,” said Gadia who is looking forward to taking the company to new heights in 2023.
