With the Indian retail sector growing rapidly, the move to levy cess on big retailers and a regulator for this sector has come in for sharp criticism as it was felt that such a move would “strangulate the industry.”
The criticism comes a day after the Department of Industrial Policy and Promotion (DIPP) had cleared a proposal for a cess on organized retail to create a fund that would finance credit to small retail players.
However, the proposal did not find favour with the Finance Ministry which felt that there is enough credit in the domestic banking system for small retailers. In September, liquidity in the banking sector was Rs 28,000 crore and is likely to remain surplus for the month.
“The government should not even think of imposing a cess nor even have a regulator as this would only strangulate the industry and come in the way of its growth,” said Gokul Patnaik, Chairman, Global Agrisystems.
As he rightly said that “why should size (big retail) be a disadvantage and why should a cess be levied on them.”
Elaborating on it, Patnaik said “I am not sure what regulator would do and why should retailers be targeted for after all it is a growing sector and this would only hamper their growth.”
The seminar on Farm to Retail at the 4th Indo-U.S. Economic Summit organized by the Indo-American Chamber of Commerce felt there was need to “restructure the supply chain and reduce intermediaries,” if retail in the agriculture sector had to be successful.
Another major factor hindering the sector was the lack of cold storage of farm products and as Secretary, Food Processing, P.I. Suvarathan admitted that “unless we empower the farmers and help in removing the disparities between retailers and farmers, the farmer would not really know what the market wants.”
Participating at a seminar on Farm to Retail at the 4th Indo-U.S. Economic Summit organized by the Indo-American Chamber, participants felt that lack of cold storage facilities, proper infrastructure network like roads were also hampering the rapid development of retail in the agriculture sector.
The losses due to poor facilities was about Rs 30,000 crore which accounted for about 40 per cent of the total produce in the processed food sector, said Patnaik.
As James Mcdonald of Pricewaterhouse Cooper said “wastage is a point that is of importance to India and a cause of concern. There is a need to improve the storage facilities so as to cut down on the wastage.”