With numerous expectations and curiosity around what is in it for various stakeholders, India’s 2018-19 budget is one of the most sought after events. Just like every other sector, retail stalwarts have also pinned their hopes on Finance Minister Arun Jaitley when he will present the Budget on February 01, 2018, expecting some good announcements in favour of retail sector.
Sunil Jindal, Managing Director, SRS Limited
In the last fiscal year, our Government had initiated a slew of moves guaranteed to shake the nation up. Among all of them GST and demonetization were the 2 key initiatives that came to be considered as the game changer, while demonetization brought forth effective ways of transaction, GST provided a unified (of taxation ).The retail industry was certainly affected by such changes and the union budget 2018-2019 will see further more changes. Firstly, we will witness the long anticipated legitimacy of franchise business. Companies will continuously branch out to smaller levels in order to capture the rural segment .Also the power of shoppers in this era is immense. The form the singular significant quotient for shaping up the direction of any business. Companies will continuously enhance the models in order to meet the consumer need, not only will this provide power to these customers but also reduces the gap between the retailers and customers.
Also and increase involvement of the digital payment gateways would endorse cashless transaction, This upcoming budget would certainly be heralder of good things to come.
Sanjay Vakharia, COO, Spykar Lifestyle
The mission to provide a long standing thrust to retail sector needs to be the prime focus. Therefore, the 2018 budget provides the Government with a perfect platform to widen the tax slabs for individuals, which would in-turn lead to increased disposable income. This would stimulate consumption and boost retail markets. Also, industry status to retail would help give access to funding to MSME retailers amid increased completion from other channels.
Mukesh Kumar, Senior VP, Infiniti Mall
India has seen a drastic shopping revolution and witnessing accelerated growth with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities. The government should focus more on the infrastructure development. In order to open and run a mall, one has to go through a lengthy process of obtaining multiple licences and permissions which not only delays the project but also increases the project cost. The upcoming budget should have a provision of single window clearance that allows ease of business. Moreover, recently announced policies have enabled many large single brand retail companies from across the globe to make an entry in India which would help creating numerous jobs and get FDI. In the coming budget, we look forward of having more incentives for the retail sector and especially for shopping malls that are generating more employment and improving consumption. Additionally, lower utility costs on part with the industry would help the malls to keep the centres cost down for operations.
Swati Bhargava, Co-founder, CashKaro.com
The first post-GST budget, and the last one for the current term of the Modi-led central Government, has pinned a lot of hope to be a populist one.
Our key expectation is a cut down in the effective corporate tax rate. Global corporate tax rates have fallen from an average of 27.5 per cent to 23.6 per cent today over the past decade. In India we pay a base rate of 30 per cent as corporate tax which is much higher once coupled with surcharges and cesses. The road map for the next budget should include the reduction of corporate tax rate to something around 18 per cent with withdrawal of tax incentives and exemptions as well as withdrawal of surcharges and cesses.
Secondly, out of Rs 10,000 crores Startup India Fund which the Government announced in 2016, only Rs 600 crore has been distributed. Today entrepreneurs struggle with basics like, how the Government defines a startup. The rules around eligibility to claim these benefits are unclear and the approval process is tedious. The new budget should create an environment conducive to business.
Also, Angel funding is the first source of encouragement for a startup and tax levied on the same is a major deterrent to its growth. Early stage investors should be spared these old policy measures. A popular scheme to take inspiration from is UK’s Enterprise Investment Scheme (EIS). It protects 61.5 per cent of investors’ investment through generous income tax reliefs as well as an exemption of capital gains tax on returns. If a similar tax relief comes to India, it will encourage investments in Indian startups.
Lastly, we also need to give incentives to the industries for larger female participation. Even subsidies for providing transportation and access to technology will create an impact. The budget should include expenditure for better infrastructure and to strengthen public safety for women. We need the basics to enable more women to join and remain in the workforce.
Anurag Sharma, Director, Akai India
The Consumer durable market is expected to grow at a CAGR of 13 per cent from FY05 to FY20 which reflects the huge potential of this sector which is yet to be unleashed. Currently the government has placed refrigerators, washing machines and other electronics of daily use in the 28 per cent slab rate under the goods and services tax. We expect the 2018 budget to east the slab rate and place the appliances under the 18 per cent slab. After all, the consumer durables electronics and appliances industry is no more a luxury but a necessity for consumers at large.
Kamal Nandi, Business Head & EVP, Godrej Appliances
We are optimistic about the forth coming budget and expect it to be a balanced combination of a reformist and a populist budget. Over the past few years, the Government has introduced several critical reforms like GST, Gram Awas Yojana (Affordable Housing), Ujjawala Yojana (Social Welfare scheme), Gram Jyoti Yojana and Saubhagya Yojana (Electrification project), the Make in India initiative – along with several others that have a significant and direct impact on the consumer durable industry. The 2018 budget is expected to be stable to continue implementing the reforms already announced.
Consumer appliances, such as air conditioners, refrigerators, washing machines and others, are no longer considered luxury items but necessities that improve and spur people productivity. Such consumer appliances need to be made more affordable to the consumers and therefore be put in a lower tax bracket – from 28% to 18 per cent. There should be further tax reductions on energy efficient products – 12 per cent for 5 star and 4 star products, to increase the adoption of sustainable appliances by Indian consumers. There should also be incentives for manufacturers to produce energy-efficient products which will be in line with the Governments focus on sustainability as well as its Make in India initiative.
Appliances industry is expecting the Budget to bring in incentives to promote domestic manufacturing and increase consumers adoption of appliances.
Ambud Sharma, Founder & CEO, Escaro Royale
When on February 1, Jaitley will present the budget and the road-map for the future india; he should have two thing in mind, ‘Accelerate the Economy’ and ‘Revive the job economy’. It will be FM’s four budget in a row yet the most important one- This is the last full fledge budget of this government and the first budget after goods & services tax implementation. We hope that when he open his suitcase on the D-Day, he keeps these following points handy:
1) The Government need to loosen up it’s fiscal deficit target and need to spend more on core sectors of macro economy- be it road, transport, infrastructure, irrigation and real estate. The idea of Government spending more in these sector will revive the trust of private investors and creating a level play field in them will revamp the private sector investment. Government has no business to be in the business – Government needs to hurry up disinvestment in the MTNL & BSNL’s of the Government and save this money to complete it’s fiscal deficit target.
For Government to create any kind of job growth, it needs to support the entrepreneurs of this country. More the job creators, more will be the jobs created. For startups and entrepreneurs to grow, the Government will do more in order to make capital funds more accessible, seed funding more common, give R&D credit for innovation, reduce logistics cost by reducing GST on road, infra and tyre manufacturing. Also, the Government will encourage lending based on the GST data and digital footprints.
Anti-profiteering procedures will be more simplified as well in order to provide ease to the e-players and benefit to the consumers.
3) The Government last year has done away with the FIPB which has put most the FDI inflows and permissions on the automatic route but the Government will need to take a reformist stand on the 100 per cent FDI in multi-brand retail. The Government will need to focus on the FDI in inventory based e-commerce startups to increase the capital funding in the sector.
4) Taxation and complication because of GST has been the greatest issue in the e-commerce sector. Especially in e-commerce with the entry of GST, a destination based tax, things has become less complex and a lot of clarification has come on the table but even after GST there are a lot of points untouched that will be done in this budget i.e. tax problems regards to discounts, vouchers, reverse logistics, COD, e-bill, multi registrations and compliance management. GST on stock transfers is also an area of concern since it has reduced a lot of working capital.
Overall, Jaitley this year has a very difficult task to make everyone happy yet not run into losses. He needs to reduce corporate tax to make tax rates globally competitive in the light of recent US tax cuts. He needs to cut down personal taxes for salaried class which is 1.7 per cent of the total population, increase spending and maintain macro-economics. I hope he will push the agenda of Modi Government of being a reformist than a populist.
Sunay Gandhi, Founder and CEO Pristine Fire
The jewellery industry has a significant role to play in the country’s overall economy. We are looking for a positive outcome from the budget. We hope that the Budget 2018 is industry friendly. Overall, an impactful budget will be the one that takes into consideration several important factors that impact consumers and retailers such as individual taxes, import and export duty etc. Firstly, we are looking forward to reduction of tax on individuals to increase consumer spending. Tax rate cuts may encourage individuals to work, save, and invest. Secondly, Government spending must be streamlined further reducing wasteful expenditure. Federal spending is taking an increasing share of the productive resources in the economy. Lower government spending frees economic resources for investment in the private sector, which improves consumer wealth. Finally, the central government should increase budgetary allocation for infrastructure and industrial growth, to boost employment opportunities.