The Indian retail industry, one of the worst affected sectors due to the COVID-19 pandemic, expects Finance Minister Nirmala Sitharaman to announce measures to improve disposable income of consumers in the Union Budget 2021. The $854 billion Indian retail sector, which is slowly getting back on track with the opening up of the economy, expects budget to prioritise growth-oriented policies and measures to boost the local economy and help revive retail, saving millions of jobs.
Retailers' body Retailers Association of India (RAI) has urged the government for formulation and implementation of national retail policy to boost the retail sector and facilitate ease of doing business. It also urged the centre to "allow retailers to register under MSME so that retailers too can be entitled for all benefits available to MSMEs", while asking to encourage states to adopt Model Shops and Establishment Act. The retailers' association has also asked the government to modify or extend the Pradhan Mantri MUDRA Yojana Scheme to include financial support for digitalisation of kiranas and small retailers.
RAI CEO Kumar Rajagopalan said the Budget should address two main things that will bring in 'Ease of Doing Business' for retailers - freedom from various procedural strangleholds and access to funds necessary for growth.
Research firm ICRA also expects government to bring clarity on implementation of the national retail policy and e-commerce policy. While the former focuses on ease of doing business by rationalising the licensing processes and improving infrastructure access, the latter addresses issues involving regulation, data protection and privacy, anti-competitive practices, among others, in the e-commerce sector.
The agency expects ease in foreign direct investment (FDI) policy to improve capital access for the retail industry, including cautious relaxations in inventory-based model of e-commerce and raising the cap on FDI in multi-brand retail trade (MBRT) from the current level of 51 per cent (under the approval route).
The Indian retail industry has been facing demand pressure following the COVID-19 pandemic. While some recovery in demand was witnessed during the festive season, the industry is looking forward to Budget announcements to boost consumption and spur spending, which will help sustain demand in the coming quarters. Reduction in the Goods and Services Tax (GST) rate on readymade garments that belong to the range of Rs 1,000- 2,000 per piece to 5 per cent from 12 per cent has also been a long-pending expectation of the industry, says ICRA.