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Budget Special: Retail industry seeks industry status and FDI

26-February-2005
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Budget Special: Retail industry seeks industry status and FDI

Though the Retail and Franchising industry is undergoing a boom, and has tremendous potential in generating jobs and contributing to economic growth, it has been on the backburner of the Government's list of priorities. Will Budget 2005 finally take a long overdue look at this burgeoning sector? After all, organized retailing is a sine qua non of development, and malls and hypermarkets are the ultimate parking places for the best of brands. The exchange4media team spoke to some key retailers to find out their wishlist for Budget 2005.

Raghu Pillai, President and Chief Executive, RPG Retail


Any step that the government takes to put more money in the hands of the consumer, and any step to improve the prevailing infrastructure will help the retail industry. As far as the wishlist for the retail industry is concerned, we would want FII investment in Retail to be allowed, as it would give the segment its due, enabling a number of choices for the organized Retail industry to source capital.

The Budget would also do well to recognize Retail as an industry. Several segments have been recognized by past finance ministers including cinema.

The Budget would become more meaningful if States are incentivised to rationalize property taxes, rental, registration and other municipal taxes so that property transactions become more transparent.

B. S. Nagesh, MD & CEO Shoppers' Stop


The first expectation is that the government should recognise the contribution of the retailing business in GDP and its role in growing consumption and in turn the economy. The last 12 months have really brought into focus the role of organized retailing whether it is through retail stores or development of malls.

The second expectation is to give Retail industry status. Treat retailing and shopping in line with hotels and use the retail industry to promote tourism and consumption. But the following benefits will have to be provided for this to happen: Permisssion for import of duty-free capital goods under EPCG as in the case of hotels against foreign exchange earned from customers under deemed exports. And allow FDI in Retail up to 26%.

Sharad Batra, Franchisee, Nirula's


The government has so much to offer to the Franchising industry but no serious thought is being given into it. There is talk of FDI in retailing, which can result in more money being pumped into the Indian economy. The only loophole in this industry, I feel, is the lack of authentication for the investors. With so many brands on an expansion spree, there is no dearth of options available to the franchisee. So there is a need for an authority that can act as a legal evaluator for franchisees.

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