Union Budget 2022: Retail Industry Expects Low GST Rate On Products, Roll Out Of National Retail Policy
We have a positive outlook towards the growth of the retail industry which has truly become omnichannel in today's world. Retail has played an important role in our lives during the pandemic. We also see life at home take an increasing significance as hybrid work models will continue to emerge in the future. Our recommendations and expectations cover the retail and home furnishing sector.
We expect the Budget to focus on providing stimulus for growth of the economy. To do this, we believe it is important to take steps to trigger private consumption, support manufacturing and exports, promote and set aside funds towards infrastructure related capital expenditure and continue to focus on the spending in public health and healthcare.
The economic impact of the pandemic on the income of people in India must not be underestimated. To stimulate demand, it is important that money is increased in the hands of people and products remain affordable. The GST rates on products that are basic to life at home should be lowered, customs duties on good quality furniture and home products should be reduced.
The government has already identified furniture as a focus sector for manufacturing. To make Indian furniture competitive, Customs duties on raw materials and intermediaries (not available in India) should be brought down. The PLI schemes, financing at lower rates, tax benefits in the initial years will support companies that want to manufacture in India. To increase India’s competitiveness in the global market, we must also look at adopting global quality standards that are tried and tested.
The retail sector has the potential to attract FDI. As a capital-intensive sector, what would also help is increasing the time to set off and carry forward losses and interest beyond 8 years; a relook at the think capitalisation rules. Tax consolidation between group companies will go a long way to simplify operations for companies, ensure tax optimisation and reduce litigations. Litigations can also be reduced by ensuring that a timely and effective dispute resolution mechanism that is binding on both parties is available for all tax dispute matters.
For an industry that spends money on construction of its stores, there is also a loss of GST credit on spends. This anomaly should be removed. Food FDI policy could be liberalised along the same lines are retail.
We also urge the government to look at ECB guidelines to allow ECB in the construction development sector where FDI is allowed but ECB is not.
We look forward to the roll out of the National Retail Policy, bring offline and online retail into a single policy framework, reduce the compliance and regulatory burden, give industry status to retail along with financial incentives to large scale projects.
Preet Dhupar, chief financial officer, IKEA India
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