The retail fraternity has higher expectations from the upcoming Union Budget 2010, which is going to be tabled on February 26 by Pranab Mukherjee, finance minister, India. The recent economic slump did paralyse many sectors including retail industry but at this recovery stage of economy, the retailers expect FM to bring in hope with a stimulus package to boost the revenue. The retailers expect the announcement of faster and streamlined implementation of goods and services tax (GST), reduction in corporate tax, reintroduction of tax exemption for real estate developers etc.
With the long wishlist in their pockets, they are hopeful to get better stimulus package from Mukherjee. IndiaRetailing tapped few retail and real estate veterans on their expectations from the government in the upcoming Union Budget. Anuj Puri, chairman and country head, JLLM says, “The real estate sector depends on a forward-looking Government to champion its cause in these challenging times. Measures to protect this vital sector’s growth prospect should necessarily include high-priority provisions for the laying down of necessary infrastructure to make sure that the potential of new locations is capitalised on. The creation and enablement of link-up satellite settlements to main cities is of utmost importance when it comes to addressing the demand-supply mismatch.”
Puri further demands, “With the investment climate once again turning favourable in India, the budget will also have to address the long-pending issue of real estate mutual funds (REMFs). The real estate route needs to be opened up beyond institutional investors and become accessible to retail investors, as well. Also, little could be more welcome than a budget that finally and decisively enables the entry of FDI into the real estate sector.”
Presenting his expactations from the Budget for the betterment of rural retail, Rajesh Gupta, president, Hariyali Kisaan Bazaar says, “The government should focus on Farmer Corporate Partnerships — tie ups of contract farming and the corporates, as is being followed by food companies or the sugarcane industry, will provide the farmers with better practices, cash inflows and assured market for crop production. Farmers will find help in terms of land preparation, crop monitoring, transportation and logistics.”
“Finally, farmers will be paid promptly and on the agreed price. An added benefit of the Farmer Corporate Partnership model would be a significant de-layering of the food chain. The informal multiple layers that currently exist lead to systemic inefficiencies, lower realisation to the farmer and higher prices to the end consumer. The direct interaction between the farmer and the corporate sector would help reduce these inefficiencies and may prove to be a win-win situation for all stakeholders,” says Gupta.
He adds, “The entry of the corporates into the agriculture sector can help in growth of the economy and make the corporates responsible to work on issues such as food productivity and food security. Also the entry of FDI in retail will help bring new international practices in rural India and investments from the private sector will help accelerate the farmer’s prosperity.”
Keeping the line of expectations similar, Sunil Sanklecha, managing partner, Nuts-n-Spices says, “We demand the early introduction of GST for the retailers to operate pan India with uniform tax structure, removal of service tax on commercial properties and reduction in corporate tax by at least five per cent.” He further demands the relief on the infrastructure development (also for imported products), more simpler legal systems (licensing) and other formalities for opening of retail stores and recognition of retail as an industry and providing incentives for giving huge employment.
“Bring in some kind of regulation for retail real estate if the government wants to turn more traditional players into modern one. Though currently there is a softening of the stand taken by developers, I am sure this will not be the same forever. Before the market environment hardens and real estate again commands a premium, there needs to be some overall framework and laws governing leasing,” notes T S Ashwin, MD, Odyssey India Ltd. He further adds, “The very one-sided leasing practices and agreements need to be curbed with stringent laws and guidelines, stiff penalties for developers and legal protection for retailers to recover their deposits for projects that are delayed or fail to take off etc.”
Ashwin further demands, “Considering the number of licenses a retail store needs to take before it can open for business can be made easier by a single window licensing system. Labour laws need to be reviewed to make it easier to adopt international best practices here too. The laws relating to weights and measures needs to be reviewed since currently, the requirements are too stringent and the retailer is more harassed for compliance than the manufacturer.”
“Retail industry is a heart of economy of any country. Ours is a second largest population country of the world, registering a growth rate of 15 to 20 per cent year on year. It is time to consider industry status and benefits for retail business,” says Jitendra Chauhan, MD, Supreemo Fashion World Pvt Ltd.
However, Mohit Khattar, MD, Godrej Nature’s Basket requests the finance minister to “Allow the FDI in multi-brand retail to bring in greater efficiencies and effectively help lower prices, improve product quality and improve the sheer choice of products to the end consumer. The govt also needs to bring in transparency on applicability of press notes 2, 3 and 4 of 2009 for the retail industry. These notes deal with the calculation of FDI in step down subsidiary of an Indian Investing company having FDI.”
“Renting of immovable property can-not be classified as a service and therefore service tax on the same must be abolished. This will lower Operating costs,” says Khattar.
Further, he demands to lower duties on imported products to enable a larger mass get exposed to highly differentiated and superior products.
— Diwakar Kumar