Budget 2022 expectations: What retail and e-commerce firms expect from FM

Budget 2022 expectations: From tax reduction to bringing down logistics costs, here's what retail and e-commerce firms expect from FM Sitharaman on February 1

India’s retail market is estimated to reach $1.5 trillion by 2030, from $0.793 trillion in 2020, driven by factors such as urbanisation and income growth. On the other hand, the Indian e-commerce industry is expected to cross the $350 billion mark by 2030, growing at a CAGR of 23 per cent.

The growth driver of the sector in India has been the measures taken by the government on technology and digitisation, especially around innovations, new modes of digital payments/online wallets, and the development of local logistics support.

Accelerated by the pandemic, the Indian e-commerce industry is set to grow by 84% to $111 billion by 2024. Similarly, Southeast Asia is on its way to record an annual growth rate of 22%, reaching $146 billion by 2025. 

Here's what retail and e-commerce expects from Budget 2022

Saahil Goel, CEO of Zomato-backed Shiprocket

At present, startup employees have to pay tax whenever they sign up for ESOPs with a vesting schedule and also pay a tax on capital gains whenever they redeem their ESOPs. Current laws tax the ESOPs prematurely when options are exercised. ESOPs should be taxed only when an employee has realized a benefit with regard to the same. Taxation should follow actual gains and not notional gains. Further, there is a deduction of TDS by the e-commerce operators on sale of goods, which leads to blockage of capital – that should be done away with.

India’s Logistics costs are high. Steps towards subsuming petroleum products under the GST regime have been under discussion for a long time- these will reduce fuel costs and progress needs to be made in that direction.

Kapil Makhija, CEO of Unicommerce

We expect the upcoming Budget to focus on increasing digitisation in Tier-II+ cities of India. Young Indians from these regions have started adopting e-commerce extensively and if the government continues to focus on the infrastructure, there is immense growth potential. Also, we expect that the government will further provide clarity on the tax obligations of e-commerce companies and brands as it will help them further streamline their operations.

Punit Sindhwani, CEO, Paxcom

The last two years have been challenging, especially for small and medium-sized business, but have also provided opportunities for businesses that were able to successfully embrace e-commerce and digital payments. For SMB to survive and thrive, a greater impetus is needed to provide digital tools, training and guidance. Our expectation from the union budget is financial support/incentives, particularly for small and medium-sized businesses, to help accelerate the digital India vision.

Kapil Bhatia, CEO of UNIREC

The fashion startups expect the government to improve the disposable income of the consumers as well as the reduction in GST rates of readymade clothings. Current GST rates of readymade clothes that cost above Rs 1,000 fall under the category of 12 per cent and the government should bring it down to 5 per cent. In addition to tax rate reduction, easier compliance and simplification of taxes are two of the major expectations of the functional fashion startups in the market. Moreover, the prime motive of the government should be to empower both skilled and unskilled employees.”