The economic growth of India has seen many turbulent times in the last year. While the first half of the year was buoyant promising nearly double digit growth, the global economic downturn did not leave the Indian economy untouched in the second semester of the year. The organised retail sector has also been sailing through difficult moments in the last few months and is now looking up to the new government to take the growth agenda forward.
The prime concern for the Government remains ensuring sustained economic growth by implementing various fiscal measures. The government needs to put in place measures that will increase the consumption level in the country and, thus, help the business growing.
For retail sector, the most significant development would be granting of industry status formally by the government. Providing industry status is the basic step needed for reforming the organised retail sector in India. The advantages of such a status will give greater focus on the development for the overall organised retail industry, help in sourcing fiscal incentives for the sector, availability of enough organised financing and establishment of the insurance norms for the business.
We also expect some softening in the tax regime. The local taxes, which account between 4 per cent and 6 per cent irrespective of the places, are a deterrent in identifying the optimum cost of the garments for the textile retailers. The industry should be reimbursed for these unnecessary and overburdening costs to ensure that they remain competitive in the global market.
In the December package for the industry, the government had provided additional funds of Rs 1,100 crore to ensure full refund of terminal excise duty/central excise and additional allocation of Rs 1,400 crore to clear the backlog of ‘Technology Upgradation Fund Scheme’ (TUFS). The reduction in central excise duty affects only man-made fibre industry; the additional allocation for TUFS (funds) in effect covers past dues only upto June 2008 and in reality is only payment of dues which was long overdue. Since the crisis started only post August 2008, the quantum of dues are the highest in this period and retailers need relief in the form of a two-year moratorium on term loan repayments falling due in this period.
The ‘Custom Duty’ on import of textiles machinery, accessories and fabrics should be abolished allowing free import at nil rates.
Abolition of ‘Service Tax’ from property as this would enable retailers for expanding their operations freely reaching out to their audience maximum without much difficulty.
Introduction of special incentives to garment manufacturers and retailers through banks in order to enable them to improve their operational facility and meet the ever increasing demands of the progressive customers.
The Government should take steps to ensure in the increase and ensure of the sustainability of disposable income. As per our experience and estimation the higher the consumers spend, higher is the sale which ultimately leads to more revenue generation.
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