Budget 2021 - A retailer’s perspective
Although 2020 disrupted every facet of life and business, yet time and tides wait for no one and the show must go on. So the retail sector picked up the pieces of its decimation of the previous year and moved on with the announcement of the Indian budget by our Finance Minister Mrs. Nirmala Sitharaman on February 1, 2021. While the demand curve did show some upward movement during the festive season, the complete recovery of revenue prospects can only be achieved through sustenance of this demand.
Being one of the largest employment generating sectors in India, just like all other industrial sectors, the retail sector had earlier presented its wishlist to the ministry. The retail industry’s expectations from Budget 2021 were definite: support the local market and help rejuvenate retail.
Reduction of customs duties on specific products like furniture, toys, etc., improving the existing local testing facilities for quality testing of certain imported items, amendment of GST laws to enable cross-state returns, and reviewing of imports under free trade agreements under Customs Act were part of the wishlist.
The retailers also said that the Government could consider nationalization of the licencing process in retail sector through thorough digitization, much reducing the time taken. The change in policy and process would definitely positively impact the economy reeling under the market upheavals faced globally due to the ravages of the pandemic and the fallout of the multiple lockdowns enforced in India as a control measure.
Some other important requests that the retail sector made are -
- Reconsidering raising of customs duties on particular products which will balance the need to push through the Make in India initiative.
- Release of ocean freight from levy of GST, as a supply of service when its in relation to shipment of imported items, can be considered to relax the strain of double taxation on retail companies.
- An input tax credit to retailers who open new stores or renovate existing ones and close old non-performing ones who decrease the comprehensive cost encumbrance.
With the on-going man-power crunch and the financial road-blocks being experienced by the retail sector, the government could defer the e-invoicing system till April 01, 2021.
The tax policies could be manipulated to increase the purchasing power of the consumer by boosting comprehensive budgetary spending, increasing fundamental exemption limits for income tax, decreasing tax rates, adjusting income tax slabs, etc.
Entirely concentrated on total economic reset and encouraging positive reactions from all quarters, the Budget’21 has elicited the following response from retailers and solution providers across the board.
They have noted that there are a few key takeaways from this budget -
- It is a growth-based and expenditure-oriented budget.
- Despite the rising fiscal deficit government has not gone for tax increase, although no tax cuts have been there.
- Tax exemptions for senior citizens augurs well for the luxury segment.
Kumar Rajagopalan, CEO, Retailers Association of India (RAI) has said - "Budget 2021 is growth-oriented, well-balanced and progressive. The big positives for retail are the overall thrust on ease of doing business and infrastructure development. Enhancing logistics capabilities for businesses is a welcome move as retail is heavily dependent on the easy movement of goods and people. Another big relief is that the government has not levied any tax to help cope with the additional financial burden on the economy due to the pandemic. Overall, it is a popular budget without being populist.”
Ravi Saxena, Managing Director of Wonderchef emphasizes - The budget is on the expected lines of recovery and reforms as it focuses on Atmanirbhar Bharat through performance-linked incentives, mega textile parks, domestic manufacturing, improved credit access for enterprises and moratorium on interest payments. It also infuses a sense of positivity in the corporate sector by proposing the revision of definition under Companies Act, 2013 for small companies. Proposal to double the allocation for MSME and announcing the multi-state co-operative for ease of doing business will also give a major boost to the sector. Along with this, allowing and incentivizing one-person companies will also give a big push to the corporate sector. However, it would have added to the joy of the retail sector if the FM would have fulfilled the long-pending demand of rolling out the National Retail Policy
So the budget has in general produced a feeling of buoyant optimism in the retail sector and will hopefully deliver on the promises.