As Parliament and its Members of Parliament are gearing up for the unveiling of the new budget on February 1, 2024, various sectors are eagerly awaiting potential incentives, reduced taxation, and a more streamlined regulatory process to propel their business growth.
Following the substantial allocations to the health, education, and infrastructure sectors in the previous budget, there is a growing expectation from the retailer’s community to be the focal point. Despite the National Retail Policy still being in the drafting stage, retailers are hopeful for positive measures in the upcoming budget, such as higher sales targets, increased consumer footfalls, and improved profit margins facilitated by lower taxes and business-friendly initiatives.
In anticipation of the forthcoming budget, numerous retailers have articulated their expectations and ideas, aiming to foster a more vibrant and prosperous retail landscape in India.
What are the expectations of the retailers for the upcoming budget?
Speaking to IMAGES Group, Aastha Almast, the Co-Founder of The New Shop highlighted some of the expectations that she seeks from the new budget that is coming in Feb. She points out that the retail sector in India is eagerly looking forward to more liberalized Foreign Direct Investment (FDI) norms, especially for Multi-Brand Outlets (MBOs) and retail franchises. There is a collective desire for enhanced accessibility to MSME loans under the Startup India/StandUp India Scheme, as retail store franchises play a pivotal role in fostering entrepreneurship, particularly in Tier 2 and Tier 3 cities. This expansion is expected to generate a substantial number of employment opportunities.
Furthermore, retailers are optimistic about the prospect of lower interest rates for borrowing, particularly for franchises associated with established retail brands. This financial facilitation is seen as a crucial factor in supporting the growth and sustainability of retail enterprises, contributing significantly to the economic development of the country.
Adding to it, Kunaal Kumar, Director, of Modern Bazaar further gave some bullet points about the retailer’s expectations from the budget.
1. Reduced GST Rates: Decreasing Goods and Services Tax (GST) rates on essential commodities and imported food products aims to enhance affordability for consumers, thereby stimulating increased sales. This reduction in GST rates is intended to make these goods more accessible to the general consumers, promoting sales and ensuring that essential items remain within reach for a wider segment of the population.
2. Better Import Policies: Streamlined, easier, and cost-effective processes for imported goods are vital for retailers like Modern Bazaar specializing in imported food products. The aim is to simplify and expedite the importation of goods, making it easier for businesses. By implementing more cost-effective import procedures, financial burden can be reduced from the shoulders of both retailers and consumers, while bringing in goods from other countries. These enhanced import policies can also benefit retailers dealing in imported food items by cutting through bureaucratic complexities and ensuring a smoother, more seamless importation experience.
3. Support for Infrastructure Development: Recognizing the pivotal role that infrastructure plays in the success of retail business, financial Incentives can be included in the budget for revitalizing retail spaces and enhancing logistics to boost supply chain efficiency. These incentives can address the evolving needs of the retail landscape, ensuring that businesses stay competitive in today’s dynamic market.
4. Promoting Sustainable Practices: The budget can also add incentives and subsidies for embracing eco-friendly practices in operations. This offers both encouragement and motivation for the adoption of environmentally conscious operations. The goal is to make this transition to sustainable ops more accessible and financially feasible for retailers who are committed to reducing their environmental footprint.
By embracing these ideas, there can be a positive impact on the overall competitiveness and sustainability of retail businesses
With the promotion of industrialization in Tier 2 and Tier 3 cities as well as villages advocating Vocal for Local, what initiatives are required from the govt to make the retail landscape smoother for retailers to expand in such cities, towns, and villages?
Addressing the challenges of establishing retail outlets in Tier 1 and Tier 2 cities, Astha says, ‘‘The allocation of prime real estate in prominent public spaces, such as transit hubs and tourist spots, needs to be earmarked for Indian retail setup. This strategic allocation aims to provide retail businesses with optimal visibility and accessibility, fostering growth and success, especially when you are emerging or expanding to a particular area.’’
Expanding businesses to Tier 2 and Tier 3 cities not only serves commercial interests but also becomes a catalyst for significant socio-economic development. One crucial aspect is the generation of employment opportunities within these cities, contributing to their overall growth and progress. By creating job opportunities, businesses play a pivotal role in enhancing the standard of living for residents and fostering a more robust local economy. Additionally, as retailers establish their presence in these cities, it directly contributes to an increase in the purchasing capacity of households. This, in turn, ensures that a wider array of products and services becomes accessible to the local population, promoting economic inclusivity and contributing to the overall prosperity of these communities.
But for such development to take place, there needs to be easy access to the financial backing. Emphasizing the role of such financial support, Aastha said ‘‘Recognizing the catalytic role of retail store franchises in driving entrepreneurship, particularly in Tier 2 and Tier 3 cities and beyond, financial support is deemed essential. By extending loans and incentives, the budget has the potential to not only fuel economic activities but also create a substantial number of employment opportunities, contributing to the overall development of these regions.’’
Kunaal further adds that to facilitate retail expansion in these areas, the government could take several initiatives:
- Improved Infrastructure: Development of roads, electricity, and internet connectivity to make these areas more accessible and business-friendly.
- Local Talent Utilization: The govt can introduce programs to train the local populations for the retail sector that not only increase the employment ratio in the region but also create a skilled workforce.
- Tax Incentives: Offering tax breaks or subsidies to retailers who set up stores in Tier 2, and Tier 3 cities, and villages can further promote the retail environment in the regions.
- Ease of Doing Business: Simplifying the process of obtaining necessary permits and licenses can help retailers set up new stores in these areas in a shorter period, fast-tracking retail development in these regions.
- Enhancing safety measures: By recognizing safety concerns and enhancing protective measures in Tier 2 and Tier 3 Cities and villages can further aid the retailers in establishing their stores at these locations.
What are your expectations in terms of incentives, regulations, and digitization from the upcoming budget?
The upcoming budget could aid the retail sector in many ways. Talking about the cumbersome process of obtaining permissions and licenses to establish retail operation, Aastha said, ‘‘ The government should promote a single-window clearance system for licenses, especially for franchisees. This streamlined approach aims to expedite the approval process, alleviating the challenges faced by local entrepreneurs who undergo financial setbacks during the gestation periods while awaiting license approvals.’’
By facilitating a more efficient and centralized system for obtaining necessary permissions, the government can significantly contribute to reducing business-related delays and fostering a more conducive environment for entrepreneurship, ultimately promoting economic growth.
Moreover, Kunaal says that strategic investments and incentives are crucial for fostering E-commerce and Digital Payment Systems. This facilitates the seamless integration of cutting-edge technologies into retail operations. In today’s rapidly evolving market, digital infrastructure plays an eminent role in harnessing the full potential of e-commerce and modern payment methods. To empower this transition towards a digital future, both financial investments and enticing incentives are necessary initiatives.
In addition to it, tax advantage for digital transformation is another expectation from the room. Incentives for retailers investing in AI, IoT, and Big Data Analytics are another requirement for the retailers. Recognizing the pivotal role of these technologies in reshaping the retail landscape, these incentives can foster an environment where retailers of all sizes can embark on a journey of digital transformation. By tapping into these tax benefits, retailers can strategically leverage technology to stay ahead in an increasingly digital marketplace.
Financial Support for SMEs is another key factor to stimulate growth and expansion in the retail sector. Specialized funding options and lower-interest loans are designed to encourage the sustainable growth and expansion of SMEs within the retail sector. By offering funding avenues with reduced interest rates, the budget empowers small and medium-sized retailers to invest in their businesses, seize growth opportunities, and navigate the path to expansion.
The budget stands as an expansive opportunity for retailers to propel their businesses forward. It serves as a substantial financial landscape, offering the means for strategic investments, growth initiatives, and transformative endeavors.
Within this vast expanse of the budget, retailers have the potential to allocate resources judiciously, fostering innovation and competitiveness. It provides a canvas upon which businesses can paint their vision, whether it be the implementation of cutting-edge technologies, expansion into new markets, or the enhancement of customer experiences. As retailers delve into this expansive budgetary realm, they are encouraged to consider it not merely as an accounting exercise but as a strategic road map for success. It is an invitation to envision the future, allocate resources effectively, and embark on a journey of sustainable growth. In this vast expanse of possibilities, the budget becomes a catalyst for innovation, resilience, and the overall prosperity of retailers.
