The Union Budget for the 2016 fiscal though focused more on farm sector and gave a balanced outlook to other industries, stakeholders of the Indian retail sector believe that the Budget did not offer any direct proposal to boost the sentiments of the business community but the sops offered to other sectors will have their implications on the retail sector’s long-term growth.
India’s retail sector, which is the third largest employment generator after agriculture and construction industry, adds considerable momentum to the country’s GDP year-on-year. According to industry sources, though there are no big-ticket announcements in the budget to add fuel to the retail sector’s growth, certain indirect measures proposed by the Finance Minister will improve the buying sentiments among the middle-class, and add up to the growth of retail and allied sectors.
Bhaskar Venkatraman, Founder and Director of JusTransact.com, an exclusive online market place for Point Of Sale (POS) technology products, says, “The announcement on GST, change in custom/excise duty structure and separate fund allocation for skill and rural markets development will improve the consumption in the long run. The GST, once implemented, will help eCommerce firms rationalize their supply chains by meeting taxation issues. For eCommerce, measures proposed to meet infrastructural challenges will improve the reach and connectivity. However, the budget lacked big announcements to face-up retail sector. More so, being the backbone of the sector, it was natural to expect relaxation on import duty on POS technology products and proposals to encourage cashless transactions in the budget.”
The government, as an another indirect measure, proposed to allocate Rs 97,000 crore for road sector which will ultimately improve the transportation and logistics commitments of the retail, e-commerce and warehousing sectors. There is also a proposal to introduce Rs 1000 cr fund to incubate technology-start ups which will boost digital/ecommerce sector, feel experts.
Baskaramoorthy D, Vice-President – Sales, Posiflex Technology (India), which offers POS and other technology products to retail sector, feels that the budget offered nothing to encourage common man. “Prima facie the budget does not encourage the common man to indulge in expenditure, which is not going to be good for the retail sector. One needs to wait and watch how the ‘Make-in-India Program’ gets implemented with clear government policy & its impact on economy,” he says.
Anuj Puri, Chairman & Country Head of JLL India, a leading research firm, feels that the proposal to revamp model shops & establishment Act will help the retail sector immensely.
“The unorganised retail businesses will receive a fillip as even small shops will get the support to open 24X7 just like malls and super markets. This not only will improve business and facilitate shoppers to get their things on all days, but also lead to more employment opportunities. However, we will have to wait and watch the reactions from the labour market,” Puri feels.
However, the silver lining is that no direct taxes to tax the retail sector as of now till we get to know the implications of GST next year, which will bring in uniform tax regime throughout India, says Bhaskar. K Ramanathan (firstname.lastname@example.org)