The Indian retail sector is looking at Budget 2021 with a lot of expectations as the industry is one of the worst affected sectors due to the COVID-19 pandemic.
My key recommendations to the government for the Retail sector for the upcoming Union budget 21-22 are:
1. Build a solid National Policy for Retail Trade: The national policy for retail was part of the initial 100-days agenda of the Modi Government 2.0. The government is also working on setting up a Single Window System for clearances and approvals for retailers in the country. A one-stop digital platform to obtain all requisite central and state clearances/approvals to start/operate a retail business is much needed.
Recommendation: There is a need to expedite the formulation and implementation of the National policy. We believe that such a step would provide a substantial boost to the retail sector and facilitate ease of doing business. We recommend that the government announce the policy in Budget 2021.
2. Recast a stronger Model Shops and Establishments Act: The Central Government introduced ‘The Model Shops and Establishment (Regulation of Employment and Condition of Services) Act 2016 (hereinafter referred to as The Model Bill) on 29 June 2016. This has been one of the asks of the Retailers Association of India for the overall benefit and growth of the Indian retail sector. The Model Bill is a progressive move by the Shri Narendra Modi Government since it gives states the choice to keep shops and other retail establishments open 24×7. This will give a substantial boost to employment and will also benefit consumers in terms of more convenience and accessibility.
Recommendation: The Governments of Maharashtra and Gujarat have recently amended the Shops & Establishments Acts of their respective states in line with the Model Bill. The Government should incentivize other states to adopt the Model Act.
3. Allow Retailers to register under MSME: Retail Trade is not classified under Micro and Small enterprises (service sector). Retailing doesn’t come under the priority sector. Therefore, if a person is merely running a departmental store or a retail shop and retailing in products, not manufactured by him, he cannot obtain MSME registration.
MSME Retail sector is the fastest-growing sector in terms of employment generation and is second only to agriculture in terms of the number of people it directly employs, besides creating indirect employment opportunities. The size of Total Indian Retail (2019E) is – USD 854 bn (Source: RAI-KPMG Report) out of which 86 per cent (USD 734 b) is MSME unorganised retail.
Recommendation: We recommend that the Government allow retailers to register as MSMEs and avail the benefits which can help them grow.
4. Fast track Decriminalization of Legal Metrology with a sense of urgency: The Department of Consumer Affairs (Ministry of Consumer Affairs, Food and Public Distribution, Government of India) had recently sought feedback regarding a proposal to decriminalize minor offences under the Legal Metrology Act, 2009 (‘LMA’). While the move to decriminalize these offences may improve ease of doing business, it is also an opportunity to improve existing processes to ensure greater transparency and access to speedy dispute resolution. Such a system will provide several benefits, including eliminating procedural delays faced in regular physical courts, reducing the number of cases that appear before judges and expediting the process of settling disputes.
Recommendation: The offences sought to be decriminalized are those unlikely to have mens rea (a malafide intent) and where the larger public interest is not adversely affected. RAI recommends to expedite the same and approve the proposal in budget 2021.