As the Indian government gears up for the annual budget, the Retailers Association of India (RAI) has fervently voiced its pre-budget expectations, advocating for an extension of benefits enjoyed by Micro, Small, and Medium Enterprises (MSMEs) to retail traders. This appeal aims to bridge the existing gap in the financial support system, emphasizing the importance of inclusive growth and equitable access to credit for all segments of the economy.
In a significant move in July 2021, retail and wholesale trades were included in the MSME definition for Priority Sector Lending (PSL) benefits. PSL mandates that banks and financial institutions meet certain lending targets set by the Reserve Bank of India (RBI) to ensure specific sectors, including MSMEs, receive adequate credit and financial backing. The overarching goal is to foster inclusive growth, mitigate regional imbalances, and uplift marginalized sections of society.
Key Expectations:
Extension of MSME Benefits to Retail Traders: RAI has appealed for the extension of all benefits available to MSMEs to retail traders. This includes formal credit under the PSL norms, ensuring that the retail sector receives the necessary financial support to thrive and contribute to the economic landscape.
Lower Interest Rates for Retailers: The association has urged the government to allocate a special fund and collaborate with the Small Industries Development Bank of India (SIDBI) to formulate a unique trader finance scheme. This scheme would provide low-cost loans and relax industry guidelines, making financing more accessible for millions of independent retailers nationwide.
Encouraging Digital Transactions: RAI recognizes the importance of embracing digital transactions and recommends initiatives to promote the use of Electronic Data Capturing (EDC) machines. The association suggests ensuring that the cost of accepting digital payments is on par with or less than the cost of accepting cash. To facilitate this transition, RAI calls for free or subsidized dispensation of EDC machines to retailers.
Tax Reforms and Simplified GST Norms: Lower taxes and simplified Goods and Services Tax (GST) norms are key components of RAI’s wishlist. These measures aim to reduce the burden on retailers, fostering a conducive environment for business growth.
Subsidized MDR for Digital Payments: To incentivize digital transactions further, RAI proposes a subsidized Merchant Discount Rate (MDR) on the use of debit cards. This would encourage retailers to adopt digital payment methods, aligning with the broader national agenda of a cashless economy.
National Retail Policy Implementation: The association advocates for the swift formulation and implementation of the National Retail Policy, providing a comprehensive framework for the growth and development of the retail sector.
Adoption of Model Shops and Establishment Act: RAI recommends the adoption of the Model Shops and Establishment Act, allowing states the flexibility to keep shops open 24×7 throughout the year. This move aims to boost economic activity and create more opportunities for both retailers and consumers.
RAI’s pre-budget expectations reflect a comprehensive vision for the retail sector’s empowerment, emphasizing financial inclusivity, digital adoption, and policy reforms. As the government deliberates on the upcoming budget, these proposals offer a roadmap for fostering a vibrant and resilient retail landscape that contributes significantly to India’s economic growth.