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Digital, GST to affect India's marketers

News, 17 February 2017
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NEW DELHI: A digital payments drive by the Indian government, a goods and service tax, and growth from rural areas are set to shape the marketing and advertising sector in what could be another year of uncertainty for India's brands.

After a year of economic upheaval, including the announcement of a goods and services tax (GST) – the biggest reform of India's indirect tax structure in decades – and a surprise demonetisation initiative in late 2016, India's marketers are facing a new reality where change is the only constant, writes Kunal Sinha in an article for Warc on the trends shaping India's marketing and advertising landscape in 2017.

The government's digital push is set to continue with a target of Rs 2,500 crore digital transactions for the year 2017-2018, he notes.

But although demonetisation spurred some Indians to move to digital payments, there is much more work to do for the technology to become mainstream. Currently, just 1.5m merchants out of an estimated 60m accept any form of electronic payment.

India's banks have been tasked with deploying one million new Point of Sale (POS) terminals by March 2017 and a new payment system called Aadhar Pay will be introduced, enabling 2m merchants to facilitate digital payments even for users who don't have a mobile wallet, debit card or smartphone.

Likewise, the roll-out of GST will impact brands at a time when demonetisation has seen Indians with less money in their pockets. The government has committed to implementing the new tax system by April 2017.

However, there is some good news for brands: massive spending through rural welfare schemes is set to unlock consumer demand from tier II and III towns, as the government focuses on enhancing agriculture income, personal hygiene and sanitation.

In addition, skills development initiatives for the rural population have been designed to promote entrepreneurship in the hinterland and these are expected to put more disposable income in the pocket of the rural consumer, improve their standards of living and ensure continued rural demand for branded consumer goods.

Data sourced from Warc

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