Multiple controls hindering trade growth in India: Eco survey

Trade sector grew by 4.8% to Rs 14.79 lakh crore in 2012-13

Multiple controls and plethora of orders are hindering the growth of wholesale and retail trade in India, which has slipped to 14th position in global retail development index last year from fifth in 2012, according to the pre-Budget Economic Survey 2013-14.

As per the survey, the trade sector that comprises wholesale and retail grew by 4.8% to Rs 14.79 lakh crore in 2012-13, accounted for 15.8% share in the GDP.

However, unfavourable macro economic conditions and a host of controls have slowed down the growth of the sector.

"Both wholesale and retail trade within the country is governed by many controls, multiple organisations and plethora of orders. This has resulted in fragmented market and hindering the free flow of goods within the economy, higher transportation cost, and in general a lower level of efficiency and productivity," the survey document said.

It further said: "Unfettered flow of goods and services is an essential pre-requisite for building a common national market that will promote growth and trace across regions and also enable specialisation and higher levels of economic efficiency".

Citing AT Kearney's global retail development index, the Economic Survey said: "India slipped to 14th rank in 2013 as against 5th ranked in 2012. India was in first place is 2009".

Pointing out factors that affected growth of retail sector in the country, survey said: "High operating costs, low bargaining power with vendors and heavy discounting to improve sales have affected profit and expansion plans".

"Real estate cost and space availability also remain important issues," the survey added.

However, it pointed out that the long-term fundamentals of the sector remain strong.

"Retail growth of 14-15% per year is expected through 2015," it added.

In order to boost growth in the trade sector, the government allowed 100% FDI in single brand retail in 2012. The government also allowed 51% investment in multi-brand retail with conditions related to investment, sourcing, etc.