Retail sector seeks Budget booster

Retail companies in the organised sector want the government to take a series of initiatives in the forthcoming Budget that would boost consumption, and have sought 'industry status' as well as abolition of the service tax to beat back the slowdown.

Vishal Retail Group president Ambeek Khemka said that besides granting industry status to the sector, the government should allow FDI into multi-brand retailing and announce some special sops for the sector.

"There should be less restrictions on the retail sector and the government should grant it industry status. It is a very big sector and a major employer," he said.

"Liquidity is a big issue and some special sops would be welcome. Besides, there should be a standard policy for the retail sector," Khemka added.

Only a small portion of the retail sector is organised and falls under the purview of local laws.

Khemka also said the central service tax should be abolished as it is having a negative impact on the sector's profitability.

Future Group CEO Kishore Biyani said, however, that the industry was not expecting any big packages or tax concessions from the budget but wanted the government to provide a big boost in consumption. 

"We believe increasing consumption should be a priority for the government rather than focusing just on investments," Biyani said.

However, he is not much optimistic about gaining industry status for the sector.

"We are not expecting declaration of industry status, at least in this year's budget," Biyani said, and added that any decision on FDI in the sector is also unlikely to figure.

Koutons Retail India Ltd chairman D P S Kohli emphasised on the need for measures to boost consumer confidence.

"The government needs to put in place measures that will increase the consumption level in the country and thus help the retail business," Kohli said.

Terming the grant of industry status to the retail sector as a first basic step towards reforming Indian retailing, he said: "The move will help develop the sector, encourage fiscal incentives, make available organised financing and ensure insurance norms."

Koutons also expects some softening of the tax regime.

"The local taxes, which range from 4-6 per cent, are a deterrent in identifying the optimum cost of the garments," Kohli said, adding that service tax from property should also be scrapped.

RPG Group subsidiary Spencer's Retail has asked the government to come up with 'growth conductive policies, ensure availability of easy credit, grant of corporate tax holiday and real estate benefits.'

Regarding FDI, a company official said, "In fact, liberalisation will foster competition, expose Indian retailers to better industry know-how and ensure flow of funds for the domestic players as well."