The Hindu Business Line : Retail looks for a twist in the Budget tale

RETAIL is a sector that boasts of annual turnover of Rs 4 lakh crore, GDP contribution of 14 per cent, and employment of 7 per cent of the total workforce, next only to agriculture.

Ninety-eight per cent of this sector is unorganised, and visible as the neighbourhood grocer, paan wallah, and pavement shops, employing over 4 crore people.

It is doubtful if there's any Budget demand from the unorganised majority; but the organised sector, which includes corporate retail chains and supermarkets, employing about five lakh persons, has its sub-3 per cent trade to complain about, despite achieving a 40 per cent growth annually.

Experts argue that the highly fragmented unorganised sector with its nearly one crore outlets in every nook and corner of the country suffers from paucity of shop space, with only 4 per cent of the retail outlets operating from larger than 500 sq ft premises.

Also, that the employment number may not be a blessing if one were to compare with the US numbers where only 9 lakh are employed to achieve 13 times the turnover done here.

On the `Global Retail Development Index' of top 30 emerging markets that A.T. Kearney announced recently, India was rated the second most attractive retail destination among emerging markets globally, ahead of China.

At number one slot was Russia with 100 points, and we scored 88, on parameters such as economic and political risks, market attractiveness, market saturation and time pressure.

To reap the advantages of attention and growth potential, organised players of this sunrise sector dream fondly of a softer regime of foreign direct investment (FDI) that opens up retail trading, including food and grocery.

Such a relaxation would be attractive, they say, even if collateral conditions are imposed in the form of norms for minimum asset size/investments, maximum number of stores, locations, local sourcing and so on.

"Retailing is the last mile infrastructure for all consumer goods and services," points out Mr N.V. Sivakumar, who heads the `Retail and Consumer Practice' of PricewaterhouseCoopers.

To grow it through the organised route, he suggests that conferring industry status should help with easier lending norms. One may then lobby for a separate minister too for the retail industry!

If one stayed long enough in the aisles of shops, it would be obvious that the wish list of retailers includes demands for reduction of Central Sales Tax (CST) along with the introduction of Value Added Tax (VAT), enhanced abatements for goods coming under the maximum retail price (MRP) levy so as to make them more affordable on store shelves, easier labour laws, changes to Agriculture Produce Marketing Committee (APMC) Acts of States, cutbacks on stamp duties for properties, and grant of tax holidays.

Even as retail looks for a favourable twist in the Budget tale, it looks doubtful if all the hard hawking by the sector would produce any quick results.

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