It is essential that the GoI accelerates the groundwork on the NRP to prepare this crucial cog in the wheel of the economy for the post-pandemic future. While e-commerce has grown by leaps and bounds, the retail sector remains the backbone of the economy, especially in the hinterlands. Even though India’s e-commerce market is expected to have an annual gross merchandise value of $350 billion by 2030 from just $55 billion in 2021, the retail sector will not just hold its own, but it is expected to reach $2 trillion by 2032.
There are over 63 million MSMEs in India contributing about 29% of India’s GDP. According to a June 2022 Monster Jobs Index, India’s retail industry is expected to generate 2.5 crore new jobs by 2030. If India is to become a $5 trillion economy by by 2025, MSMEs and offline retailers must be duly recognised.
India is a retail dense country, but it has many associations and various departments that study the issues and opportunities in the sector. For all the challenges facing the sector, there needs to be a retail ministry or a centralized department that could exclusively represent this segment. Although retail is one of the most important pillars of the Indian economy, accounting for more than 10% of GDP, it still does not have industry status and does not enjoy any special incentives or benefits. . An industry status will not only help regulate the sector, but it will also provide the necessary impetus for small players to more easily access bank funds at low rates while guaranteeing better wages and employment conditions for the workforce. important work.
In addition, since small retailers need special attention and support, the Indian government should seek to appoint a nodal agent or create a central regulatory body to help them establish physical stores. . The banking system can also be leveraged for these small unorganized traders and retailers to access affordable funds. A special lending window can also be established under Pradhan Mantri MUDRA (Micro Units Development & Refinance Agency) Yojana.
In the current scenario, 30 to 40 licenses are needed to start a retail operation, including trading, weight and measure, and GST registration. It is a daunting task to run pillar in post to get these licenses. There is an urgent need to establish a one-stop customs clearance system with faster customs clearances and extended validity of licenses to boost the business ecosystem and facilitate the growth of small businesses.
Customers increasingly decide when to shop, how to shop and where to shop, whether online, offline or a mix of both. Amidst this rapidly spreading fast-paced trade, traditional mom and pop stores are the ones facing the real heat. The competitive environment of deep discounts and super-fast home delivery results in low margins and higher delivery costs for most players, resulting in negative Ebitda for most e-commerce businesses and fast trade.
As the future is omnichannel, the choice to go out and shop at nearby stores will continue. This is where government and big organized players need to join hands to initiate skills development programs for small retailers. A one-size-fits-all approach will not benefit any stakeholder. The solution lies in policy diversification. The same set of regulations for retail giants and smaller retailers could eventually lead to more distress and undermine the immense growth potential of the sector.