To increase the share of organized retail to 20-22 per cent from the current share of 3 per cent of the retail sector which is estimated to touch USD 427 billion by 2010, The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has mooted a proposal for accord industry status, introduction of comprehensive legislation, elimination of multiple licenses and immediate strengthening of the commodity exchanges.
In a note submitted to the Ministries of Commerce & Industry and Consumer Affairs, the Chamber president, Sajjan Jindal has stated that providing industry status is the first basic step needed for reforming the Indian retailing sector. The advantages of such a status, Assocham feels are greater focus on retailing development, fiscal incentives for retailing industry, availability of organised financing and establishment of insurance norms.
Granting industry status may also facilitate the provision of fiscal incentives to this high potential sector as has been in case of the hotel industry where investments improved significantly after granting of industry status and the provision of fiscal incentives.
The note further says, fundamental issue is to bring the retail sector at par with other countries. Simultaneously, India need to study the mechanism adopted by other countries as to how they have grown over the years in leaps and bounds and what sort of fiscal and regulatory mechanism they have adopted in their respective countries has been stressed. Also, the government may consider treating retail sector as thrust area – on the lines of food processing sector as retail sector has both forward and backward linkages and provide the much needed employment in the country.
Assocham feels, the development of the sector at a faster pace can take place if a comprehensive legislation is enacted. The legislation so drafted should be simple and have a futuristic approach. It should take into consideration the developments that are taking place in this arena worldwide. The legislation should provide broad parameters within which the retail sector should operate and day–to-day functioning and other modalities should be prescribed in the rules. The underlying idea is to have minimum modifications in the Act in the future.
Asoscham has observed that the major stumbling block for the development of commodity markets in India is a fragmented physical/spot market. Apart from this, there are still several barriers to free movement of commodities in the form of physical restrictions (under the Essential Commodities Act, APMC Act, Licensing restrictions) and fiscal hurdles (Differential Taxes, Stamp Duties). The hurdles that are coming in the way of overall growth of Retail Sector should be done away with. In today’s environment, archaic laws and regulations have no place.