Ahead of the Budget 2020, Deva Jyotula, Retail Head at Kalpataru Limited, shared his insights. India is the 5th largest global destination in the retail space. With the budget 2020 being around the corner, there is a hope that the new policies will have a positive impact on the retail and the consumer sector. The retail sector is the most dynamic sector in recent times, there has been drastic changes and has witnessed high consumer activism, supply chain model, marketing and advertising activities and introduction of new players in the market.
A joint report by Assocham and MRRSIndia.com suggest that the Indian retail / consumer market is set to cross the $1 trillion mark by 2020 due to rise in per capita income and consequent expenditure.
8 challenges faced by the retail sector in 2019:
- Higher GST rates resulting in accumulation of non-refundable credit due to substantial spend on advertising and branding spending capacity.
- Multiplicity of laws and regulations governing the sector
- Restrictive conditions under the foreign direct investment (FDI) policy for single-brand retail trading leading to ambiguities and hurdles for the e-commerce sector.
- Lack of clarity and understanding of regulations/guidelines imposed on online retail trading.
- Lack of proper physical and digital infrastructure, developed supply chain resulting in inefficiencies and higher costs.
- Rise in overall real estate costas growth in retail sector has resulted in a growing demand in the real estate sector
- Lack of effective supply management. Solid infrastructure and developed supply chain will improvise the foundation and overall profitability
- Lack of incentives for the new players in the retail market.
10 expectations from the government in Budget 2020 :
- GST slab to be simplified and reduced. Successful / structured implementation of new mechanism that will help ease the process.
- Simplification of the government laws, clarifications on open issues, measures for ease of doing businesswill have a positive impact on the sector and will give freedom to try new techniques and introduce new trends.
- The budget should consider educating and clarifying regulations for the retailer and traders ensuring sound risk management practices and KYC (know your client) mechanisms.
- Promoting partnership and collaboration for accessing new channel capabilities, digital technologies and easier entry into new market may help in optimizing costs.
- Introducing laws and rules to reduce the real estate costand stabilisation of tax policies on properties would prove to be of great help to common man who look forward to live in beautiful homes or for investment purpose
- Introducing new incentives and bold reforms will encourage the new-bees in the retail industry to expand their activities across various platforms.
- Supporting rural growth and expecting positive initiatives like MGNREGA, increase in the MSP for select crops, focus on electrification of villages, farmer friendly technologies, etc.
- We expect new entrants/ investors in the FMCG space with introduction of simplified tax structures, stability in custom duty and a less aggressive tax administration.
- A special start-up growth fund to support start-ups will boost the start-up ecosystem immensely.
- We expect the budget to provide impetus for digital payments (Debit and credit cards,UPI)