Bark, but retail not wagged

Shoppers, it's still stop. This year's Union Budget was expected to revisit the controversial issue of allowing Foreign Direct Investment (FDI) in retail. The other was the issue of granting one of the economy's fastest growing sectors an industry status. Both these were given a miss by the Finance Minister. In fact, apart from the imposition of service tax on rentals, a move that is expected to hike costs for retailers, the sector was completely ignored. While the tax rate was not disclosed, the move is expected to hit the sector hard. Said Govind Shrikhande, CEO, Shopper's Stop, "For the Retail Industry there are no positive Signals. In fact Service Tax on Rentals, would further impact the Occupation Cost," he added. There was talk that the Budget would announce initiatives allowing higher FDI in sectors that do not directly affect smaller domestic retail companies like sports goods, electronics and building equipment. These sectors were to be allowed a higher FDI cap. Currently the government permits 51% FDI in single-brand retail through FIPB. For multi-brand, there is 100% FDI in cash-and-carry through the automatic route. The organized retail industry in India is currently on a fast track growth path and is expected to clock 25-30% growth per annum over the next 5-6 years. By 2010, the industry is expected to triple its current revenues to Rs 1,095 billion.

Courtesy: EconomicTimes
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