The Indian retail sector on Friday said it feels left out by the Budget as its main demands of easing foreign direct investments and granting industry status to it have not been met by Finance Minister Pranab Mukherjee.
"We were expecting FDI rules to be relaxed in retail business. It would have benefited retailers as well as the ultimate consumers," Vishal Retail Chief Managing Director Ram Chandra Agarwal said.
Retailers have been requesting to allow FDI in multi-brand retail and to increase foreign investments in the single-brand format from the existing 51 per cent.
Mukherjee only reiterated the statement of taking a firm view on opening up the sector, made by Prime Minister Manmohan Singh some weeks ago.
Koutons Chairman D P S Kohli expressed disappointment over the sector not being given industry status and being overlooked again.
"Industry status continues to elude the retail sector. This is a disappointment since this is the first step in truly reforming the sector and organising this highly unorganised sector," Kohli said.
He, however, welcomed the government's decision to reduce surcharge on domestic companies and said it will help the sector to expand.
Future Group Chairman Kishore Biyani said that a year's delay in implementation of the GST is a setback as it will continue the chaos in the system and the cost of operating business will remain high.
Biyani, however, said, "The Budget overall is a positive one and I believe it will increase consumption. The easing of direct I-T rates is welcome and it will bring more money to consumers and fuel spending."
He said the sector is also likely to witness more investment on account of Finance Minister's mention about encouraging downstream investment.
"However, a year's delay in implementation of the GST is a setback as it will continue the chaos in the system and the cost of doing business will remain high," Biyani said.
The Retailers Association of India (RAI), the apex body of the sector, said the announcement to increase focus on agriculture and infrastructure will boost consumption.
"We welcome Finance Minister's statement where he has reiterated the views of the PM," RAI Chief Executive Officer Kumar Rajagopalan said.
"New tax slabs and rates would offer relief to 60 per cent taxpayers providing them with greater disposable income. This would provide the necessary boost to consumer spending in the country," Koutons' Kohli said.
Global consultancy firm Ernst & Young (E&Y) said the government should have at least made some clear rule regarding foreign private equity funding in the retail sector.
"If not exactly relaxation of FDI, at least some clarity in FII and PE funding would have been welcome," E&Y Partner and National Leader (Retail and Consumer Product Practise) Pinakiranjan Mishra said.
