If retail is granted industry status in India, it will become more viable for businesses: Lalit Agarwal, CMD, V-Mart

Lalit Agarwal, Chairman & Managing Director, V-Mart Retail Ltd, during an interview with Deepali Rana, Zee Business, spoke about his expectations from the upcoming budget, need of warehouses and cold chain facilities and why industry status should be provided to the retail industry. Edited Excerpts: 

Q: What are your expectations from the upcoming budget?
A: See, we are a retailer who is targeting the large scale inspirational and middle group customers, who resides in small cities for its business. And, we wish that the government should come out with a mechanism, like increased MSP, social benefit schemes, loan waivers and new job opportunities, that can boost the buying potentiality of the customers. This can be attained by increasing their income. For the purpose, the government will have to strengthen the economy through the budget. Any relief in income tax can increase their potentiality to spend.

Secondly, all types of apparel of sale value exceeding Rs1,000 per piece is being taxed at 12 per cent but I feel that the limit for taxation should be increased to Rs1,300-1,400. 

At a corporate level, we wish to see some changes in online and FDI norms, although several changes have been implemented, to run the economy smoothly and protect the domestic retailer. And the holistic implementation of the laws will protect the domestic retailers from online retailers who use their deep pockets to lure the customers. We are looking forward to a fair economy, fair retailing.  
 
Q: Industry is demanding incentives to set up warehouses and cold chain facilities. How it will boost the industry?
A: See, there is a huge shortage of infrastructure and logistics in India and that is a reason that several products including food grains get wasted at the place of its origin/production and are not able to reach to the market. And, taking them to the market turns up to be a costly affair. For instance, the shipment cost of goods from China is lower than the shipment or logistic cost of domestic market. So, any improvement in infrastructure will be beneficial for the end-consumer and the retailer. It will also help in advancing the economy. 

The retailers will be benefitted if the government plans to invest in improving the supply chain management or provides some benefits, like capital incentives, employment benefit or manufacturing benefit, to the retailer is setting up a warehouse. Secondly, government investment in developing cold chains or benefit for setting a cold chain will help in protecting fresh products till they reach the market. This effort will help almost everyone in the chain from a farmer/producer to a retailer to a consumer. 

I think storage and warehousing facility including the logistic facility is something that the industry needs at present. Availability of such facilities, which is growing in a true sense, will help India to progress. 

Q: Industry also wants the government to grant industry status to the retail industry for easier access to finance and attract more investments. What is the status and how it will change the face of the industry? 
A: There is an absence of a ministry or department to channelize/regulate the retail industry and assist us, the retail segment, in doing their business. In fact, there is no one to which we should approach our problems. But, the retailer needs several things for opening a shop like he should have to have 50-52 licences and permissions including weights and measurement act, food safety act, shop and establishment act, labour laws, board and signage law and fire laws. Thus, there are multiple departments.

Thus, allotment of the industry status will help us in getting access to a department/ministry who can regulate us, the retail industry. The retail sector is the second largest employer in India after agriculture at present. In addition, this categorisation will help us in getting different benefits like access to bank funds at right rates, a chance to be in eyes of the foreign investors and face similar laws, pricing mechanism and costs across the country. I know, the federal structure of the country makes the task difficult for the government but hope that it may do something to fulfil the demand. 

Q: Any update on the growth status of FY19? Has it been in accordance with acceptance? 
A: FY19 has been an average one for us as it has not performed as per our expectations due to the delayed marriage season. But, we can grow in the remaining three months. Our growth has been below our expectations but is better than the past year. In fact, we have launched 34 more shops and a few more (3-4) shops will be opened in the remaining part of the financial year. Thus, we are trying our best to expand ourselves and increase our reach to small cities. 

Q: What's your overall outlook for the sector?
A: Retail industry, may it be online retail or offline retain or big show stores, is the talk of the town at present. As every consumer wants to buy the right product from the right place and in the best way. In short, he wants to experience the change, and therefore I feel that there is a very good and positive outlook for the retail sector. If you have a look at the retail industry, then you will find that foreign retailers are launching themselves in India, online stores are increasing their business and offline domestic retailers are also improving themselves.

In fact, the small traders or unorganised traders are also upskilling their stores and business. I think retail has a good future in India as it is going to be a big business avenue in the country. Any increase in India’s consumption story or per capita income will increase the retail industry. I think if India’s per capita income goes above $1500 from the existing $1000-1200 will bring a huge buoyancy in consumption in India, which will directly benefit the retail sector. I think retail is one of the areas that should have a good outlook in the recent future and the time to come. This bounce will be backed by the changes that have been implemented in FDI and e-commerce, which will help the small and domestic retailers to grow.