BUDGET WISHLIST: Retail firms want a definite timeline for GST rollout

In the run-up to Union Budget for 2015-16, Business Standard looks at major developments and industry expectations in key sectors of the economy

RETAIL SECTOR

KEY DEVELOPMENTS

• Rise of e-tail: Online marketplaces and e-commerce are disrupting business of physical retail stores

• Investments: Several e-commerce companies have received big investments lately

• Organic growth: Retailers are expanding in Tier-II and -III cities. Consumer demand in smaller towns and cities, reasonably priced real estate and a focus on local manufacturing will aid consolidation and growth of organised retailing

• Acquisitions: The year 2014-15 has seen a pick-up in acquisitions, both in retail and consumer space, and an increased interest in the food sector

• Variety: Both restaurants and food-based consumer firms have experimented with a variety of global and national cuisines and tastes

KEY ISSUES 

• GST implementation: This would go a long way in eliminating tax inefficiencies across sectors and boost manufacturing. The FMCG sector — and now e-commerce — will benefit by rationalisation of warehousing capacities in various regions. Logistics companies also stand to gain

• Private labels: Development of these by large retailers is emerging as a threat to FMCG firms and original equipment manufacturers

• Supply chain: Inefficiencies continue to be a cause for concern, especially for big-format retailers. Cold chain infra and warehousing capabilities need to be increased

• Status: No industry status for the retail sector is a drag

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CEO BYTE

Govind Shrikhande, Customer care associate & managing director, Shoppers Stop

“We look forward to this year’s Budget and expect the government to put forth a definitive timeline for a nationwide rollout of GST. The tax regime will help us set off service tax on rent, giving a significant boost to the industry. Overall, we expect concrete measures to further improve investment climate & consumer sentiment and bolster consumption”

EXPERT VIEW
 

Business Standard had invited readers’ queries on the Budget for 2015-16. A PwC expert answers key questions

Rachna Nath, leader (retail & consumer practice), PwC India

What could be the threshold limit for GST? — Raghuveer Kamath

The finance ministry had proposed a threshold limit of Rs 25 lakh for GST. Since states have a significant number of VAT dealers with turnovers between Rs 10 lakh and Rs 25 lakh, the empowered committee of state finance ministers in August last year recommended a threshold of Rs 10 lakh for general-category states and a lower one of Rs 5 lakh for special-category and northeastern states.

According to the finance ministry, the Rs 10 lakh threshold limit for GST is too low to create a business-friendly tax administration. 

What are the expectations on retail play in the times to come?

Reinventing the physical-store format and collaborations in the online and offline space will be the order of the day. E-commerce and traditional retail firms joining forces to complement each other will result in a pan-Indian coverage of consumers and boost supply chain and distribution infra. The focus will, therefore, be on growth and improving the supply chain in India.