With numerous expectations and curiosity around what is in it for various stakeholders, India’s 2018-19 budget is one of the most sought after events. Just like every other sector, retail stalwarts have also pinned their hopes on Finance Minister Arun Jaitley when he will present the Budget on February 01, 2018, expecting some good announcements in favor of retail sector.
In the last fiscal year, our Government had initiated a slew of moves guaranteed to shake the nation up. Among all of them GST and demonetization were the 2 key initiatives that came to be considered as the game changer, while demonetization brought forth effective ways of transaction, GST provided a unified (of taxation ).The retail industry was certainly affected by such changes and the union budget 2018-2019 will see further more changes. Firstly, we will witness the long anticipated legitimacy of franchise business. Companies will continuously branch out to smaller levels in order to capture the rural segment .Also the power of shoppers in this era is immense. The form the singular significant quotient for shaping up the direction of any business. Companies will continuously enhance the models in order to meet the consumer need, not only will this provide power to these customers but also reduces the gap between the retailers and customers.
Also and increase involvement of the digital payment gateways would endorse cashless transaction, This upcoming budget would certainly be heralder of good things to come.
Mukesh Kumar, Senior VP, Infiniti Mall
India has seen a drastic shopping revolution and witnessing accelerated growth with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities. The government should focus more on the infrastructure development. In order to open and run a mall, one has to go through a lengthy process of obtaining multiple licences and permissions which not only delays the project but also increases the project cost. The upcoming budget should have a provision of single window clearance that allows ease of business. Moreover, recently announced policies have enabled many large single brand retail companies from across the globe to make an entry in India which would help creating numerous jobs and get FDI. In the coming budget, we look forward of having more incentives for the retail sector and especially for shopping malls that are generating more employment and improving consumption. Additionally, lower utility costs on part with the industry would help the malls to keep the centers cost down for operations.
Swati Bhargava, Co-founder, CashKaro.com
The first post-GST budget, and the last one for the current term of the Modi-led central Government, has pinned a lot of hope to be a populist one.
Our key expectation is a cut down in the effective corporate tax rate. Global corporate tax rates have fallen from an average of 27.5 percent to 23.6 percent over the past decade. In India we pay a base rate of 30 percent as corporate tax which is much higher once coupled with surcharges and cesses. The road map for the next budget should include the reduction of corporate tax rate to something around 18 percent with withdrawal of tax incentives and exemptions as well as withdrawal of surcharges and cesses.
Secondly, out of Rs 10000 crores Startup India Fund which the Government announced in 2016, only Rs 600 crore has been distributed. Today entrepreneurs struggle with basics like, how the Government defines a startup. The rules around eligibility to claim these benefits are unclear and the approval process is tedious. The new budget should create an environment conducive to business.
Also, Angel funding is the first source of encouragement for a startup and tax levied on the same is a major deterrent to its growth. Early stage investors should be spared these old policy measures. A popular scheme to take inspiration from is UK’s Enterprise Investment Scheme (EIS). It protects 61.5 percent of investors’ investment through generous income tax reliefs as well as an exemption of capital gains tax on returns. If a similar tax relief comes to India, it will encourage investments in Indian startups.
Lastly, we also need to give incentives to the industries for larger female participation. Even subsidies for providing transportation and access to technology will create an impact. The budget should include expenditure for better infrastructure and to strengthen public safety for women. We need the basics to enable more women to join and remain in the workforce.
Anurag Sharma, Director, Akai India
The Consumer durable market is expected to grow at a CAGR of 13 percent from FY05 to FY20 which reflects the huge potential of this sector which is yet to be unleashed. Currently the government has placed refrigerators, washing machines and other electronics of daily use in the 28 percent slab rate under the goods and services tax. We expect the 2018 budget to east the slab rate and place the appliances under the 18 percent slab. After all, the consumer durables electronics and appliances industry is no more a luxury but a necessity for consumers at large.
Kamal Nandi, Business Head & EVP, Godrej Appliances
We are optimistic about the forth coming budget and expect it to be a balanced combination of a reformist and a populist budget. Over the past few years, the Government has introduced several critical reforms like GST, Gram Awas Yojana (Affordable Housing), Ujjawala Yojana (Social Welfare scheme), Gram Jyoti Yojana and Saubhagya Yojana (Electrification project), the Make in India initiative – along with several others that have a significant and direct impact on the consumer durable industry. The 2018 budget is expected to be stable to continue implementing the reforms already announced.
Consumer appliances, such as air conditioners, refrigerators, washing machines and others, are no longer considered luxury items but necessities that improve and spur people productivity. Such consumer appliances need to be made more affordable to the consumers and therefore be put in a lower tax bracket – from 28 percent to 18 percent. There should be further tax reductions on energy efficient products – 12 percent for 5 star and 4 star products, to increase the adoption of sustainable appliances by Indian consumers. There should also be incentives for manufacturers to produce energy-efficient products which will be in line with the Governments focus on sustainability as well as its Make in India initiative.
Appliances industry is expecting the Budget to bring in incentives to promote domestic manufacturing and increase consumers adoption of appliances. – India Retailing