Budget 2025 evokes positive reactions from India’s A&M industry

The Union Budget 2025-26 presented by the Finance Minister Nirmala Sitharaman on February 1, 2025 has largely elicited positive response from India’s advertising and marketing (A&M) industry, with a few caveats. Many hope the Budget will act as a catalyst in boosting consumer spending. With more disposable income in the hands of middle-class consumers, brands will benefit, and in turn, invest freely in marketing and advertising, according to the industry players. 

A key Budget provision is the income tax relief provided to Indian's massive middle class. Pushing the taxability threshold to INR 12 lakhs—and an additional INR 75,000 standard deduction for the salaried class—advertising industry representatives are interpreting this move as a game-changer.

“For years, the middle class has been like that student who studies hard but rarely gets a gold star. This time, the government has finally handed them a well-deserved reward in the Budget. For once, this segment isn’t just getting a mention—it is getting a real, tangible benefit,” remarked Shrenik Gandhi, CEO of White Rivers Media.

He added that the relief would lead to growth in discretionary spending by the country’s middle class, which, in turn would boost demand in consumption-heavy sectors such as FMCG, retail, automobiles, real estate, and travel. These sectors have traditionally been the largest spenders when it comes to advertising and marketing in India.

Industry players believe that the Budget will catalyse nearly 10% growth in the overall advertising spends by brands this year. Digital ad spends, which has seen a continuous upward movement in the recent past, is expected to further benefit with brands expected to to leverage the improved consumer confidence.

Fuelling innovation?

Another key focus of the Budget this year has been on R&D and digital adoption. According to A&M players, this policy direction chosen by the government and the accompanying investments will provide a fillip to fresh investments by the private sector in the areas of research, innovation, and digital transformation across sectors.

“The Union Budget 2025’s focus on digital transformation through initiatives like the INR 20,000 crores R&D spending, DeepTech Fund of Funds, and investment in AI excellence centres signals India’s commitment to technological advancement,” commented Siddharth Devnani, co-founder of SoCheers.

These provisions are expected to have a cascading effect on the country’s A&M industry, as they will result in the growth of new research and availability of a range of AI-powered solutions for advertisers and brand marketers including in the areas of data analytics, predictive analytics, programmatic advertising, and more. Already several agencies have opened their global capability centers. With new investments coming into AI and digital, there will be a strong movement towards ramping up these infrastructural investments.

Additionally, with the growing influence of tech in creativity, brands will also lean towards personalised campaigns and messaging powered by AI and digitalisation. Agencies, in turn, will be prompted to integrate technologies such as AI, machine learning (ML), and AR/VR as key components of their marketing and advertising strategies.

Sameer Makani, director of Makani Creatives, noted, “Budget 2025’s effect on the advertising industry is multifaceted. While some cost increases, particularly in digital signage hardware, may pose challenges, the potential for increased investment in digital advertising, local manufacturing incentives, and support for startups presents opportunities for growth and adaptation.”

The Budget’s emphasis on expanding broadband connectivity in rural areas through BharatNet is also seen as a move that will significantly increase the reach of digital advertising, particularly in untapped regional markets.

Encouraging MSMEs and startups

The Budget’s focus on incentivising the MSMEs and startups is being seen as a potential growth driver for the A&M industry given the width of these organisations across the country. The classification criteria of MSMEs has also been revised to INR 10 crores in turnover for micro enterprises, INR 100 crores for small enterprises, and INR 500 crores for medium enterprises.

According to Prasad Shejale, founder and CEO of LS Digital the push for AI-led innovation, coupled with initiatives to streamline global operations and taxation frameworks, will accelerate enterprise adoption of digital technologies, making India a key hub for advanced AI-driven solutions.

Gautam Madhavan, founder and CEO of Mad Group, further opined that the expansion of the Fund of Funds for startups will provide much-needed capital support for emerging businesses. "The increase in credit guarantees up to INR 20 crore further strengthens financial accessibility for startups, ensuring a more resilient ecosystem,” he added.

According to Rakesh Hinduja, managing partner at Wondrlab Network, expanding access to capital for MSMEs and startups will unlock a new wave of innovation and digital transformation. "With the allocation more funds, India’s creator economy and marketing-tech sectors stand to gain exponential momentum, driving industry growth by at least 2-3x in the next few years,” he predicted.

However, some industry players also pointed out the need for direct incentives for digital advertising and AI-driven marketing. “While this is a step in the right direction, direct incentives for digital advertising and AI-driven marketing would have further accelerated industry growth,” said Hemal Majithia, founder of Oktobuzz.

Focus on sustainability

The Budget’s focus on sustainability too has been acknowledged by the industry players as a positive development. Businesses are increasingly being held accountable for their environmental impact.

There also has been a consumer pressure on brands to be environmentally responsible in action as well as messaging. “With an increasing focus on sustainability, the Budget could encourage advertisers to adopt greener practices, which would impact the production of advertising materials and the types of campaigns being developed," opined Makani of Makani Creatives.

While the Budget has made many business-friendly provisions, a few industry leaders have specified aspects that needed a greater attention of the Finance Minister. According to Shruti Mishra, CEO of Iimage Stereo Marcom, sectors such as textile production, railways, and semiconductor manufacturing needed a greater attention and push from the government.

The overall sentiment about the Budget in the A&M industry sentiment, however, has largely been positive. “The Union Budget 2025 brought in a fresh wave of optimism for the nation. We are pleased to see the economy taking strides towards achieving a healthy balance between consumption and expenditure. An upswing in consumption can have excellent effects on the economy—a scenario where everyone contributes to fuel the growth further,” said Sameer Joshi and Anindya Ghosh, the founding partners of Sam & Andy.