Everyone agrees that India’s economy is one of the fastest-growing in the world, and a large portion of this growth can be ascribed to the expanding middle class, which is driving economic expansion through retail purchasing.
One of the main drivers of India’s economy, retail contributes over 10% of the country’s GDP. By 2032, the retail market in India is projected to grow from its current $1 trillion valuation to $2 trillion. With 1.4 billion inhabitants, India has one of the world’s fastest-growing retail markets.
The creation of jobs in the retail sector and related industries is another aspect of the retail industry’s contribution to the expansion of the Indian economy. This sector employs about 50 million people. In addition to generating indirect job opportunities, the retail industry is the one with the quickest rate of job growth and is second only to agriculture in terms of the number of people it directly employs.
One important feature of this industry is that its benefits are not limited to particular socioeconomic classes; rather, retail can help a variety of institutions and the general public. Because modern retail is more transparent, its contributions go to the exchequer.
We at the Retailers Association of India sincerely support the government’s objective to promote equitable growth for India, and the government has made significant efforts to revive the sector with the recent reforms. The retail industry truly has the capacity to support the government’s mission.
Some topics are identified in the RAI Pre-Budget Memorandum 2023-24 as needing the government’s attention because they might give the sector the boost it needs to grow. To boost the retail sector and boost the nation’s GDP, RAI advises the government to take into account the following important factors.
I. Boost Retail and Consumption
The Union Budget for FY 23–24 should prioritize creating demand and promoting consumption by providing incentives or concessions in the form of reduced taxes in order to guarantee the sector’s growth. It will help the retail industry and improve consumer mood generally. Development is proportional to consumption. Individual taxpayers’ tax breaks and advantages will boost their monthly disposable income and encourage spending. In order to boost demand and consumption, growth-oriented initiatives must also be given top priority in the budget. To encourage the growth of the retail sector, the budget should include measures like skill development, streamlined regulations, supporting policies, and straightforward goods and services tax (GST) standards.
II. Provide low-cost finance to retailers
To ensure simpler financing for retail firms, a special statement in the budget must be made to cut loan rates for shops. By announcing low-cost loans and easing some industry regulations, the government should establish a unique trader finance program with SIDBI and set aside a special fund to assist millions of independent shopkeepers nationwide.
III. Encourage Innovative and Convenient Digital Payment Methods
The Unified Payments Interface (UPI) and other digital payment methods have made it easier for customers to make payments. UPI alone showed a 650% surge in semi-urban and rural stores in India. The same has backed removing the obstacle in cash-based economies like India and facilitating businesses’ expansion into the online market. Supporting these technological advancements that make digital payments easier is necessary. The government must support new and simple digital payment methods by announcing their targeted scope. Additionally, it is necessary to encourage digital transactions by waiving or reducing MDR for debit card use.
IV. Consider Retail as an essential service
The retail food and beverage industry must be prioritized and seen as a vital service. Benefits and subsidies must to be provided for land rates as well as other essentials like electricity.
V. Expedite National Retail Policy to enable ease of doing business
The creation and execution of national policy must be accelerated. We think that taking such a step would make doing business easier and significantly benefit the retail industry.
VI. Extend all the MSME benefits to retail traders
Retail and wholesale businesses are now considered MSMEs by the government, and they can register on the Udyam Registration Portal. However, Priority Sector Lending is the only way that MSMEs can gain from retail and wholesale commerce. We suggest that all benefits offered to other MSMEs should be extended to retail and wholesale dealers.
VII. E-enablement of MSME retailers
Helping Indian shops modernize is unquestionably necessary. The first stage in modernization is the introduction of Point of Sale (POS) equipment, which assist retailers in creating invoices for customers and enable store owners to let a non-family member operate the cash registers without fear of theft.
The uses of the above machines are many. The key uses are:
- The bills made from such machines create accountability to customers and ensures that retailers take responsibility for what they sell to customers.
- It allows owners of businesses to employ managers who can manage the business without losing control over basic data of sales.
- It allows a quick update of stock, sales, and intake and hence helps manage sales and inventory
- It helps keep a record of customers and allows for a more useful CRM (Customer Relationship Management)
VIII. Model Shops and Establishments Act
One of the main demands of the Retailers Association of India for the general well-being and expansion of the Indian retail industry has been the introduction of “The Model Shops and Establishment (Regulation of Employment and Condition of Services) Act 2016” (henceforth referred to as The Model Bill) by the Central Government on June 29, 2016. The Model Bill, which gives the states the option to keep stores and other enterprises open around-the-clock throughout the year, is a progressive move by the Shri Narendra Modi government. In addition to providing consumers with greater accessibility and convenience, this significantly increased the creation of jobs.
In accordance with the Model Bill, the Maharashtra Shops & Establishments Act 1948 was recently updated by the Maharashtra and Gujarati governments.
Other states should be encouraged to adopt the Model Act by the government through incentives and encouragement. Electronic data capture devices, or EDCs, are also necessary for retail establishments to accept a variety of bank cards and other electronic payment methods. This encourages a responsible trading environment and aids in the acceptance of digital currency. We believe that encouraging the adoption of point-of-sale equipment is an excellent method to help the nation and its people transition to a fully accountable economy.
To be able to take digital payments without concern, small traders must be urged to employ EDC equipment at the very least. Every retailer in the nation should employ EDC machines, and efforts should be taken to guarantee that accepting digital payments never costs more than accepting cash. The government may wish to establish a free or heavily subsidized system for dispensing these machines throughout the nation. This can be accomplished in phases; a good place to start would be with about 25 lakh machines. Since these retailers will register under GST, it will also benefit the government.
Encouragement of retailers to purchase point-of-sale (POS) equipment with high-quality software for sales accounting and billing should also be a priority. One effective strategy to promote adoption is to reimburse small retailers for the cost of such point-of-sale systems. For an audit trail of bills to be possible, all of these programs need have strong accounting rules and an integrated security system. When certifying suitable point-of-sale devices and software, caution must be used.
IX. EPCG for the Retail Sector
In order to develop contemporary infrastructure in the retail industry, we also suggest reintroducing “EPCG for Retail Sector.” Retailers with a minimum space of 1000 square meters are eligible to get concessional duty benefits under the EPCG scheme for imports or capital items.
X. Risks of Proposed GST Hike on Products based on price range
The formal retail industry as well as consumer attitude may be significantly impacted by the proposed increase in the GST rate on clothing, shoes, purses, cosmetics, watches, and other high-end goods. The formalization of commerce may be threatened by such increases, which could lead to a move toward disorganized marketplaces. Furthermore, by postponing the local expansion of the retail industry and affecting job prospects, this action runs the risk of weakening the government of India’s Made in India campaign. The government should take a more balanced approach that protects the formal retail ecosystem and maintains customer confidence to increase collections.
