Retail sector is at an interesting phase of evolution in our country today. It is a social sector which can act as a catalyst to drive consumption and enable the growth of our economy. From the current size of $425 billion, Indian retail sector is estimated to grow at an annual growth rate of 11 per cent and reach $1,248 billion in the next 10 years.

This higher growth rate will be accompanied by creation of millions of jobs, streamlined infrastructure and supply chain to combat inflation, higher price realization for farmers for their produce, reduction in wastage of fresh produce and increased tax revenue to the exchequer. Hence, it is of paramount importance for the government to enact suitable policies and laws to facilitate the successful development of the Indian retail sector.

At the outset, Union budget announcements can impact retail sector in terms of overall consumer confidence and hence demand generation, capital inflows into the sector and profitability through tax outflows. Higher real estate costs, lack of capital and mandated funding norms are major concerns plaguing this sector today. In this regard, any indications towards policy changes with respect to retail sector such as FDI in multi brand retail, real estate zoning laws, mandated lending norms for retail and formation of ministerial committee to monitor the progress of retail will benefit the sector immensely. It is interesting to note that suitable changes in retail policy will help the government to arrest inflations and its cascading effects. Although there was no mention about FDI in multi brand retail, we await favourable announcements in the near future.

Faster roll out of GST as indicated in the budget is very critical for the sector. GST will bring in uniformity and avoid cascading of multiple taxes across states. Also, premise of GST to tax at consumption rather than production will help retailers to locate warehouses optimally and bring down their supply chain costs. Further any reduction in central sales tax rates, abolition of service tax on leased properties and transportation costs, provision to set off service tax and CST against VAT would have helped to improve profitability in this sector.