India’s retail landscape is poised for a seismic shift, with its trajectory setting it firmly on the path to becoming the third-largest consumer market by 2030, trailing only behind giants like China and the US. A pivotal player in driving GDP and employment, this sector, however, grapples with the complexities and challenges of doing business. But there’s a game-changer on the horizon: The Centre’s new retail policy promises to revolutionize the industry. Discover how this transformative move could reconfigure the dynamics of Indian retail in our in-depth analysis.
Why Is a Nationwide Retail Policy Crucial for India?
The enormity of India’s retail landscape is staggering, with its offline market having soared to $860 billion in 2022, and predictions suggest it could swell to twice its size by the decade’s end. Meanwhile, the online retail segment, currently a robust $70-billion market, is on track for swift expansion as delineated by Deloitte’s 2023 insights. Despite this, a fragmented policy scenario mars the sector. While foreign investment in retail is structured by explicit regulations pertaining to both single and multi-brand ventures, there’s a discernible absence of a unified model policy—one that states could emulate to optimize the small and medium retail business sector.
What Regulations Confound Retailers?
Navigating the Indian retail sector’s legal framework is a formidable challenge. The intricate web of regulations, including the Shops and Establishments Act, Competition Act, Consumer Protection Act, Essential Commodities Act, and the Legal Metrology Act, form a labyrinthine regulatory environment. A startling revelation from a 2020 CII report highlights that retailers may grapple with as many as 16 to 25 different permits and licenses in the quest to set up shop. What complicates matters further is the dichotomy of central and state-led regulations and local body permissions, precipitating a complex compliance conundrum with state-specific regulatory discrepancies.
What is the Retail Sector’s Wishlist?
The clamor for a comprehensive retail policy echoes across associations, a plea that’s been persistent for years. Core demands coalesce around a desire for streamlined procedural red tape, enabling a more congenial business climate; an easing of financial avenues; fostering a tech-empowered and modern makeover for conventional retail players; filling chasms in the logistics and supply chain infrastructure; and amplifying workforce engagement and efficiency. These goals sketch the contours of the retail community’s aspirations, underscoring the imperative for a policy that speaks to the present and future of India’s burgeoning retail ecosystem.
Does a Global Best Practice Exist for Retailers?
The recent CII report throws a spotlight on international retail strategies that ease the path for both major and small-scale traders. Take Singapore’s initiative in 2016 which unveiled a comprehensive retail agenda designed specifically to help smaller establishments go digital, as well as equip SMEs with the critical skills necessary to thrive. An impressive example of this is Singapore’s Hawkers Go Digital programme, catalyzing the widespread use of digital payment methods among local vendors. What’s more, launching a supermarket in Singapore is a matter of just five working days, a stark contrast to India’s lengthy 60-90 day timeframe.
How Has the Indian Government Responded?
Kicking off the year, the Indian government made bold strides with the Jan Vishwas (Amendment of Provisions) Bill, 2023. This legislative move has the potential to lighten the regulatory load, offering decriminalization of select offences under acts such as the Legal Metrology Act and the Food Safety Act, thereby smoothing the road for doing business. On the horizon, the National Retail Trade Policy sits poised in its draft form, promising, upon activation, to lay the groundwork for a standardized retail environment. This includes plans for a singular portal through which retailers can secure a variety of licenses necessary for establishing and operating their businesses with greater ease.
