NON – FISCAL INCENTIVES in Hotels

INTRODUCTION
The Indian economy is changing in profound ways by the onward march of its “consumers”. Consumer growth has, of course, always  been a central engine of economic growth, but what is significant about the past decade is the acceleration in the pace of change, which in one way reflects greatly on the evolution of the consumers and the role of modern retail as well.

The retail sector accounts for 12% of the national GDP. With about 25 million people being employed it is the second largest employer after agriculture in the country. India's overall retail sector is expected to rise to around $600 billion by 2013. Modern retail, currently accounting for around 5 percent, is pegged at around US$ 20 billion. This is expected to grow and touch US$ 107 billion by 2013.

The key factors that drive growth in retail industry are young demographic profile, increasing consumer aspirations, growing middle class incomes and improving demand from rural markets. Modern Retail is a catalyst for consumption. Modern retail has the much required multiplier effect on Employment, Real Estate, Supply Chain, Agriculture output such as Fruits & Vegetable and Staples. Modern retail improves tax collection as retail transactions are transparent. By selling genuine products, Modern Retail helps in fighting counterfeit products, thereby protecting government revenue from excise and VAT. It also helps in protecting intellectual property rights of trademark holders The retail sector is also, the only truly “equal opportunity” employer, inasmuch as almost 50% of the employees in the modern retail trade are women, and the Country’s stated goal of non-discrimination on the basis of caste, creed, gender, religion, etc., is also best met by the retail industry. The retail  workforce primarily comprises local 10 th and 12th standard pass-outs, who have very limited employability  in any other sector. This truly boosts the agenda of inclusive growth. The Central Government and many other State Governments have been appreciative and very supportive of the emerging needs of the diversified streams of the retail industry. However some affirmative steps can substantially enable retailers to provide a further impetus to economic growth.

NON – FISCAL INCENTIVES


1) Request to recognize Retail as an industry
Retail deals with the consumers in the country and is the second largest sector after agriculture in the number of people it employs. We earnestly request that the samebe specifically recognized since the growth of the retail sector can benefit theconventional retail trade, the Government’s exchequer, consumers and farmers/producers.


A Minister to look after the interests of the retail sector shall help the sector flourish and get a face‐lift. This will also enable better financial processes due to benchmarking and enable prudent practices in retail. Retail will also become eligible for all support and incentives as applicable to other industries.

2) Retail Policy
A Retail Policy should be considered for promulgation by the government which will help modern retailing grow from strength to strength in India. RAI would be happy to work with the Government in setting up an empowered committee to guide and supervise implementation of the Retail Policy and take appropriate decisions.   The empowered committee could comprise Government officials, representatives from the retail industry and consultants and experts.  The Retail Policy could also provide for a single‐window clearance system. The Single‐window clearance will further streamline license processes associated with the establishment and management of retail stores. The State Governments could draw their guidelines for implementation from the National Retail Policy.

3) FDI in Retail
FDI in retail trading should be opened up to substantially improve productivity and distribution system through modern format retailing. The current distribution system is a big bottleneck to the rising GDP and growing consuming mass. Need to ensure efficient ‘farm‐to‐fork’ system. This would require huge capital, international know‐ how and best practices. Hence, the need for FDI. The additional benefits are:
• Consumers: variety with best quality  prices & convenience
• Producers: benefits from bulk orders/ minimizing market risks
• Industry: boost to exports & food processing
• Society: Increased employment through backward and forward linkages As in the case of other industries (like banking, insurance, telecom, aviation, etc), there should be laid out a policy statement laying down the roadmap for modern retail and allowing Foreign Investment in retail.

4) NEED FOR  A SINGLE WINDOW CLEARANCE SYSTEM
There are multiple licenses and clearances required for setting up and operating a retail store in India To strengthen retail industry in India, the government can provide a single window clearance system instead of having to interface with various authorities. The single window clearance will further streamline license processes associated with the establishment and management of retail stores. Online registration of Shops and granting online Certification should be introduced to avoid corruption and expedite the process of registration of shops and establishments.
There should be an introduction of a concept of Self Governance. The Retailers having a considerable business should be allowed to follow the route of Self Governance. In self governance, there can be an Annual Return with Auditor’s Certificate to be filed by the Retailer confirming the compliance of the Act.
Post filing of Annual Return the concerned Statutory Authority can call for relevant documents to verify the details and compliance given under the Annual Return. This will not only reduce departmental harassment but also massive corruption.
Any inspection should be with prior notice by the inspectors to the retailer. The surprise inspection should be conducted by the inspectors only on the instructions of the Labour Commissioner against a complaint of gross non compliance of the Act by any retailer.

5) Retail and Entertainment Zones (REZ)
We applaud the Government’s efforts in creating world‐class SEZs in our country. We do believe that economic growth can be strengthened by creating a sense of well‐ being and increasing consumption. In order to augment the living standards of people in the city, the government could look at creating Retail and Entertainment Zones (REZ) similar to SEZ and IT parks. Retailers in REZ to get benefits like exemption from stamp duty, octroi, and cheaper power.  RAI would encourage the Government to look at Zoning to create a much‐needed balance between residential, Commercial, industrial and recreational areas. Creating such zones would ensure that there is increase in consumption and more importantly would raise the standard of well‐being of the citizens. This shall also be a step in the right direction to promote shopping and entertainment tourism thereby also increasing our foreign exchange reserves. Smaller countries like Singapore and Dubai have been effectively generating substantial amount of revenue by these means.