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Budget 2019: Upbeat advertising sector looks for achche din to continue

Leading advertising industry experts are upbeat about the Interim Budget, which will be presented in Parliament on February 1, 2019. They believe that advertising sentiment is largely linked to the overall state of the economy. 

While Ashish Bhasin is bullish about India for the next 5 to 10 years, Shrenik Gandhi is hopeful that the government will continue to help the industry flourish in the way it had done in the past 5 years. Sanjeev Gupta wants the focus to be on boosting consumption and prioritising investments, specifically in manufacturing. 

Ashish Bhasin, Chairman & CEO - South Asia, Dentsu Aegis Network:

“There are two main expectations – one that the advertising industry benefits if the overall industry sentiment is upbeat, because advertising is a very sentiment-driven business in India, so anything that drives GDP drives advertising industry even more. The rule of thumb is that if there is a growth in GDP, then the advertisement grows at 1.5 times more. If the Budget is growth-oriented and drives India’s GDP and overall economic environment, it is always good for advertising.” 

“The second point is that as far as the advertising industry is concerned, people don’t mind paying the taxes, they’ll go out of their way to do so. However, the complexity of both direct taxes and indirect taxes takes away too much of time and effort, so simplification of the efforts, quick refund process, ease of doing business, improving on ground will be very helpful to our industry. I’m not sure if this is going to be addressed in this Budget or not, but GST on advertising is tremendously high at 18 per cent, if that would come in the 12 per cent bracket, it would make a great difference to the advertising industry.” 

“Overall, I’m bullish about India for the next 5 to 10 years and the reason for that is we are poised for a high growth phase; many people are likely to come out of poverty, many are already coming out at a rapid rate and the consuming class is increasing. Our domestic consumption itself is significant, so to an extent that insulates us against the turmoil in the rest of the world. Hence, I think we are in a high growth phase and if the government’s policies and the budget support that, I think this would continue.” 

“One factor, of course, which so far has worked in our favour but is always a question mark, are the monsoons. We underestimate the importance of monsoons. Even today, almost 60-65 per cent of our population is based in rural India and a large part is engaged in agriculture. Even after 70 years of independence, India is still dependent on the monsoons for irrigation. Therefore, if you see most categories in the big cities, metros, etc., they are quite well penetrated and often the saturation level is high in most urban places, but the real growth is coming from Tier 2, 3 and 4 towns and villages and that gets very much impacted by how good the monsoons are. So, if the monsoons are good and if the Budget is supportive, I think the sentiment will be high, which will be great for the economy and even greater for advertising.” 

Shrenik Gandhi, CEO & Co-Founder, White Rivers Media:

“The advertising industry is directly dependent on the economy and grows or degrows in proportion to the change in the economy. Any structural reform which benefits the economy is welcome. I have really high expectations from Piyush Goyal and so does the nation, and knowing his past achievements, I am sure this Budget shall be another feather in his hat. Increase in income tax limit shall save entry level advertising professionals from tax burdens. A typical advertising or any other professional comes under the tax scanner within the first two years of starting a job. Ideally increasing the limit by a bit might give them a relief and a scope to become more corporate mature before starting a life-long tax-paying habit.” 

“Overall, the digital industry has grown in last 5 years like no other period and we hope the government continues to help the industry flourish. Advertising industry is one of the few industries which induces purchase for most other industries, effectively helping customers find better at a micro level, and help the economy grow at a macro level. Hence, the industry must be taken better care off, by the government.” 

“We hope the government takes a slightly more positive stance towards crypto and creates policies which shall help take benefit of the crypto ecosystem and drive away the negatives. Yes, India being one of the largest economies of the world, this is easier said than done but I believe we must not be missing out on crypto bus should there be scope to benefit.” 

“This being an Interim Budget, the expectations aren’t a lot, but the above shall certainly help set things in motion for the bigger budget mid this year.” 

Sanjeev Gupta, MD & Founder, Global Advertisers:

  • “The Interim Budget must focus on boosting consumption and prioritise investments, specifically in manufacturing.
  • Rationalisation of corporate tax rates, including Minimum Alternate Tax and Dividend Distribution Tax.
  • Since e-way bill rules are expected to come into force soon, a simplified and smooth framework should be implemented, which will go towards enhancing the ease of doing business index.
  • Reduction in overall corporate tax rate to 25 per cent for all companies, in line with the commitment made by the Finance Minister.
  • Clarity on GST implications of various sales promotion schemes.
  • Availability of credit of Equalisation Levy to overseas Online Ad companies has increased cost of doing business in India. A clarification should be issued that this Levy is indeed on income allowing access to treaty for claiming credit.
  • Provide relief from Minimum Alternate Tax (MAT) to companies under insolvency proceedings.
  • Concept of “economic employment” should be accepted under secondment arrangements to facilitate ease of doing business and inflow of know-how.

 

Faisal Amin, Media & Tech Entrepreneur (Founder of KIRA, Co-founder of Fruitbowl Digital Media)

Last year's budget saw the introduction of GST which demanded a rapid change in pricing and procedure for both agencies and their clients. The hope is that this year, a reduction in GST rates and changes in FDI and import taxes could help make platforms and advertising more price competitive, encouraging larger and more widespread media and advertising budgets. On the other hand, a budget change in favour of the common man could potentially increase consumer spending and thus promote advertising spends in industries such as real estate, consumer goods and e-commerce.   

 

 
Preksha Seth, Co-founder of Utopian Media

As an agency that handles many global clients, the major challenge at hand is dealing with any change in the tax rate; specifically import and export.  A slight rise in these numbers or FDI could force major corporations to restructure their budget and withdraw funds from marketing and advertising. While the challenge of new strategies and approaches is something we always love taking on, a lower budget is always a less-than-ideal constraint.
While we are hoping to not see any drastic changes this year, the 2018 budget was both a boon and bane. The new tax filing system and high GST prices caused us a lot of trouble. On the other hand, the 2018 budget encouraged corporations and companies to look at building a digital infrastructure, which in turn, helped us explore different avenues and sectors of the market. 2019 will be the year of great content and a lower GST rate would encourage clients to back that up with advertising spends, and that's always a good thing - because who doesn't like a good budget.  
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