Budget reaction: Retailers upbeat; its almost status-quo for e-tailers

The retail space recieved a shot in the arm on Thursday as Finanace Minister Minister unfolded his maiden Budget in the parliament.
Budget 2014: Retailers upbeat; its almost status-quo for e-tailers
New Delhi: The retail space recieved a shot in the arm on Thursday as Finanace Minister Minister unfolded his maiden Budget in the parliament. Though the Finanace Minster has not given anything straight to retail sector, but there are few budget proposals that actually gave some reasons for retailers to smile. 
 
Arun Jaitley raised the basic income tax exemption limit by Rs 50,000 for taxpayers below 80 years of age. In addition to it, he also increased the investment limit under 80C from Rs 1 lakh to Rs 1.5 lakh. These measures will encourage saving and investment.  This would also mean higher disposable income.
 
The government has allowed the manufacturing sector to sell its products through retail including e-Commerce without any additional FDI approval. This means manufacturing units can sell through e-commerce platforms like Snapdeal, Ebay, Flipkart, Amazon.com etc in their current format in India. So, the decision would indirectly help etailers. 
 
Jaitley has given a strong indition that the government will roll out the proposed goods and service tax or GST next year. He reassured states that all their concerns will be addressed, in order to smooth roll out of GST. 
 
The GST will replace many indirect taxes including service tax, excise levy, state value-added tax and other levies. This decision will be very very crucial for states.
 
In an innovative initiative, the FM has announced a Rs 10,000 crore fund for early stage companies. The move is expected to encourage entrepreneurship and e-commerce startup.
 
Taking these developments of the budget in account, here is what retailers and experts have to say on the sector:
 
Harkirat Singh, Managing Director, Woodland
 
With only six weeks to his credit, the FM has done a good job by emphasising on the manufacturing, infrastructure, housing and solar energy sectors in a big way. While few initiatives have been proposed, there have been no big bang announcements. 
 
We welcome the FM's decision to approve Goods & Services tax (GST) by year end and hope that he truly understands its importance to the retail sector. If adopted, the government could put together a common market by seaming together a host of taxes such as Excise, VAT and Octroi. 
 
The announcement to cut excise duty to 6% from 12% on footwear upto MRP of Rs 1000/- pair, is a welcome move for SME's and will help provide them with a level playing field. Competition is always welcome!
 
I also feel that the announcement of Skill India, a programme to train youth for jobs could lead to more skilled workforce, a gap which needs to be urgently addressed for the growth of the retail sector. 
 
And lastly, more savings, will lead to more consumer spends, giving a boost to the retail sector.
 
 
Soon Kwon, MD, LG India
 
We welcome this budget and it has definitely created an overall positive sentiment. It is realistic and growth oriented.
 
Announcement of investment allowance is a boost for manufacturing sector. The budget should also bring a smile to the consumers with the increased tax exemptions that will leave them with extra disposable income and prospects to invest in white goods. Also government focus to work on a roadmap for GST implementation is a welcome step, considering it will bring transparency in the system and also make it faster and easier in movement of goods from one place to another.”  
 
Ved Prakash Mahendru, Chairman and Managing Director, Eon Electric Limited
 
The Union Budget has introduced fiscal prudence and balanced it with growth triggers, revealing a strong intent on part of the Government to lead the country on a sustained growth path. Reducing fiscal deficit and controlling inflation were two measures which called for immediate attention to redress. This is exactly what the Government, which has only just come into power, has attempted to do in this Budget announced on 10th July, 2014. 
 
Improving fiscal deficit and revival of economy on fast track basis is a  a long-term drive and the Government has kept that in mind. While the fiscal deficit for the current fiscal has been pegged at 4.5%, which looks quite realistic, the Government has also committed to reduce it to 3% of GDP by the end of FY16-17. We are quite confident that if the Government sticks to the measures it has laid out, the country will be able to achieve the desired macro-economic outcome of higher growth, lower inflation, sustained level of external sector balance and a prudent policy stance.
 
The modernization of the cities and the measures laid out for shaping the concept of smart cities is very good news and is considered critical to give the right message to the world of our internal growth and self reliance. It will open up opportunities for electrical equipment manufacturing companies and all kind of consumables. 
 
Moreover, the investment allowance of 15% for 3 years for companies who are investing more than Rs 25 crore in plants or through machineries is a big boost for indigenous manufacturers which will boost investment in indigenous industry to overcome cheap low cost imported products of all kinds including all kinds of consumables and LEDs etc.which are critically needed in the country to boost electric energy saving, the demand for which is growing all round the country for industrial development.
 
Lalit Agarwal CMD V-MART Retail ltd.
 
We retailers welcome commitment to implement GST and applaud the concept of 100 smart cities.  The consumer gets an extra opportunities to spend by saving on personal taxes
 
Anurag Rajpal- Director and CEO of American Swan
 
Overall it was a good budget, The budget is still ambiguous about allowing FDI in ecommerce. Also, its stated that FDI in the manufacturing sector is today on the automatic route, this means that manufacturing units can sell through e-commerce platforms like Snapdeal, Ebay, Flipkart, Amazon.com etc in their current format in India, which they could do earlier as well.
 
This budget was more focused on infrastructure. Sectors like Power, mining, road transport, waterways etc. They are likely to gain and attract more investment. A growth in these sectors will not only result in development in other sectors but will also help generate employment which indeed is the need of the hour.”
 
Rajat Wahi, Partner and Head of Consumer Markets, KPMG in India.  
 
The current budget clearly highlights the aim of the government to address the deficiencies in Indian Agriculture at the grassroots by having a three pronged thrust on Creation of enablers to boost Agri Infrastructure, extension of better credit support to farmers and reducing the dependence of the farming community on the vagaries of nature. 
 
Including Protein Revolution under the Second Green revolution is a welcome move by the government to shift from a typical Rice-Wheat dominated pattern to a more diversified produce basket. 
 
The emphasis on Restructuring FCI, reducing transportation and distribution losses and efficacy of PDS has highlighted that reforms in the food sector are a key result area for this Government. All in all, this is a very balanced approach by the government with respect to the Food & Agri sector and will have a positive impact in addressing the root causes of the ills that plague Indian agriculture.  
 
Sharad Venkta, MD & CEO, Toonz Retail India
 
The budget is more of directional in nature and has focus on fiscal prudence and administrative improvements. FM stayed away from any big bang announcements and remained focused on basics. There was a clear cut focus on manufacturing and infrastructure sector. Personal income tax exemptions is a welcome move in this inflationary scenario for middle class population.
 
The move by the government to allow manufacturing units to sell their products through retail including e-commerce platforms is welcome and among other will give a boost to employment in both urban and rural India.
 
FM has promised to give introduction of GST a thrust which is a welcome move and industry look forward for a clear cut road map.
 
Sandip Shah, Co-Founder & Managing Director, ShopYourWorld.
 
The Modi Government has withheld Foreign Direct Investments (FDI) in the e-commerce industry and has decided to only allow foreign companies manufacturing products in India (like Puma, Benetton, Marks & Spencer, Decathlon and others) to sell their merchandise through the e-commerce route.  This shall greatly benefit these brands.
 
At the same time, not allowing FDI a free reign in the Indian market protects the indigenous players from external competition, thereby winning the Government their favour and support. We hope that more research goes into the understanding of the e-commerce sector, as it is clearly the way of the future. A planned approach needs to be made to help channelize and refine it, and it is hoped that the Modi Government invests considerable time, money and energy in its expansion.
 
Gaurav Gupta, Senior Director, Deloitte in India
 
While people were expecting some significant changes, the budget still puts additional money in people’s hand and also makes items like processed foods, soaps, LCD/LEDs, footwear etc cheaper. There is an increase in duty on aerated drinks but it should not significantly impact the overall industry. 
 
These changes will hopefully lead to better demand and along with the incentives to invest in manufacturing, should help increase the manufacturing base in India. One additional benefit for consumer goods and electronics sector is that they can now sell through eCommerce channel  and while we will wait for the fine print, this should include MNC firms that have manufacturing capabilities in India.
 
Lubeina Shahpurwala, Co-Director, Mustang Enterprises
 
The new government’s take on the liberalization of FDI in e-commerce will provide the much needed confidence in Indian markets which will not only create a healthy competition with established players but it will also give new entrants and a solid platform to reach new consumers, expansion of markets and growing businesses. 
 
Also, the approval on manufacturers being able to sell products through retail and e-commerce platform through a single window approval process will tremendously affect the small manufacturing industries especially the apparel and the fashion accessory industry, as it will create the process quicker during the product export process. 
 
Another good news is the Rs 200 crore allocated to six textile clusters which will give a boost to the production of raw material and we will have multiple raw material suppliers to choose from.

 

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