What India’s retail sector wants from Budget FY19

Retailers in India are hopeful for more changes in the retail sector in the upcoming Union Budget that will be presented on February 1.

Along with affordability, retailers look forward to further relaxation to norms to help in ‘ease of doing business’.

“This budget can be a very progressive budget for India. All indications are that the institutional corrections that needed to be done with respect to cash and taxation are all done and we’ve bitten the bullet with the leadership of the Honourable Prime Minister. All indications are that India should be on a fast growth path, which should help towards consumption. We hope that the budget gives lots more in the hands of individual consumers for them to be able to go out there and buy. If consumption in India increases, it re-emphasises the democratic dividend that India has and this will further support the Make in India movement in the country,” said Kumar Rajagopalan, CEO, RAI.

Budget expectation for the retail trade submitted to the government by the Retailers Association of India have been listed as follows.

1. Industry status for retail sector: Such a step would provide the sector with support in accessing the financial system and hence allow for more investment in the sector and also allow the critical sector to be eligible for all support and incentives as applicable to other industries.

2. Access to renewable power sources of energy: Retailers having power demand less than 1 MVA shall be allowed access or open access to use renewable power sources of energy such as solar energy and wind energy.

3. FDI for Indian-owned and managed businesses: 49% FDI is allowed to all Indian owned and managed retail entities without any restrictions under Automatic Route.

4. Stricter implementation of the Model Shops and Establishments Act: The Central government introduced 'The Model Shops and Establishment (Regulation of Employment and Condition of Services) Act 2016 in June of 2016, which is a progressive legislation. However, it has been adopted only by Maharashtra. The government should encourage to other states to adopt the same.

5. Eliminating intermediaries between farmers and retailers: The provisions of the APMC Act has to be relooked to facilitate easy procurement of produce by retailers who can then pass on the benefits to consumers.

6. E-enabling small retailers and incentivizing digital payments: Affordable and accessible billing system (both hardware and software) to small retailers in India will be one of the key elements for early and widespread adoption of e-enablement. There is a need to make accepting digital payments attractive to retailers either by making them cheaper than card payments or by incentivising acceptance.

7. Further simplification of GST: One of the biggest tasks with regards to GST is that the government provide for GST refunds to International Tourists, promoting tourism and retail. GST invoices issued to BTC consumers be further simplified by eliminating the mention of HSN codes on them, removing the need for manual signature and multiple copies. In addition, RAI has highlighted several practical problems and operational challenges faced by retailers with regards to GST and have included a few recommendations based on the same.

Despite the 100% foreign direct investment in single brand retail allowed by the government, retailers have also stated their requests to relax policies to aid the sector. Global retailers in India are looking for changes in regulations to sweeten the deal further.

“We are happy to hear about the local sourcing requirement being offset towards H&M’s global sourcing from India. While it is in the right direction, we look forward to the same relaxation in the period beyond the initial five years as well, in view of ease of doing business,” Janne Einola, Country Manager H&M India, said in a Business Standard report.