FDI in retail a win-win deal for customers

Last year’s Budget was focused on inclusive growth, educational reforms, improving infrastructure and provision to leave the general public with more disposable income. In a sense, it provided stimulus to the retail sector, but overall it left many crucial aspects untouched like foreign direct investment (FDI) in retail, industry status to the sector, reduction of taxes etc.

Overall, 2009 has been a better year for the industry compared with 2008, when the industry faced the most difficult survival test. We sailed through what has been a tough economic year and that stands testament to the strength of the fundamentals of this economy.

This year we expect the Budget to focus on growth in the three main areas — exports, agriculture and manufacturing. In retail, we expect introduction of the goods and service tax (GST), which will help in streamlining taxes. The single tax regime will benefit the retail sector and bring majority of transactions under the tax net. As a consequence, retail prices of a number of items are likely to fall.

We also expect import tariffs to come down to a maximum tune of 40%. This will also have a positive impact on retail prices of a majority of products. Such an impetus can help in increasing the consumption level. Now when the sector has witnessed consolidation and emergence of stronger players, many of us need the financial strength to help us grow. We are very keen on government to provide us concessions like a softer interest rate regime.

This year also we do not expect FDI relaxation in retail sector to be announced. Such a step could have been a big booster for international retailers to enter India. This can improve the quality of merchandise as well as improving the product availability and lower prices. In the end, it could have been a win-win situation for the customer.

Hopefully, the Budget this year will also keep the spotlight on job creation in both urban and rural areas. This is central to our vision of a better tomorrow and a strengthened economy.

The writer is president & CEO, Shopper’s Stop Ltd