Budget 2018: From FDI to unified market, challenges ahead for retail sector

Indian retail industry is projected to grow at a promising CAGR of 10% to reach $1.1 trn by 2021

 

Key challenges
 

• Multiplicity of laws & regulations governing the sector

• Lack of industry status for retail

• Lack of clarity and understanding of regulations/guidelines governing online retail trading leading to ambiguities and hurdles for the e-commerce sector

• Lack of access to organised funding, especially to small retailers

Source: Strategy&/PwC Research

What industry wants

• National Retail Policy: A single retail policy will help streamline various laws and regulations affecting the retail sector

• Unified National Market: To be globally competitive, India needs to adopt a ‘unified market’ approach to the retail sector – minimise licences required and establish a system of single-window clearance. The game-changing GST will help

• Rationalisation of FDI: While the government has given the necessary push to ‘Make in India’ in food retail, it would help if non-food ‘Make in India’ retail category can also witness a liberalised FDI policy 

• SBRT and MBRT: The SBRT and MBRT frameworks need to be defined in the FDI policy. Divisions could be on the basis of nature or formats of retail

• Industry status: This will improve access to funding to MSME retailers, especially amid high pressure with growing competition from organised retail and e-commerce

 

PwC POINT OF VIEW

Akash Gupt, partner and leader regulatory services, PwC India

• We look forward to a national policy for retail to complement growth of various channels 
• It will provide the right stimulus to both domestic and foreign investments in the sector. 

• A conducive regulatory environment for offline and online retailers will help build ‘New India’, benefiting consumers, industry and economy at large

J Suresh, MD & CEO, Arvind Lifestyle Brands

Industry voice

• After the GST, the key support for the retail sector will come from policies that stimulate consumption. For example, a reduction in direct taxes will increase disposable income and lead to more consumption

• Incentives for investment will encourage both industry and generate jobs. A big push on infra investment will help push job growth and consumption