Retailers are an unhappy lot after finance minister Arun Jaitley refrained from doing anything significant to boost urban income, and thus consumption. They also suggest that prices of perfumes, toiletries, sunglasses, footwear and toys, among other items, will likely to increase as import duties on these items have been increased from 10% to 20% in the Budget 2018. On the business side, large organised retailers too had expected some reduction in corporate taxation, which did not happen. “We were also hopeful that the FM would reduce and revise GST rates for pertinent categories to drive consumption and contain inflation. Instead, we are met with an increase in the customs duty, which will have a significant impact on prices, directly driving inflation and impacting consumption.
This, coupled with the introduction of 10% long-term capital gains (LTCG) tax exceeding Rs 1 lakh in the equities market, may dampen the consumer sentiment,” said Govind Shrikhande, customer care associate & managing director, Shoppers Stop. Rakesh Biyani, joint managing director, Future Retail, said: “Union Budget 2018-19 is a balanced one, especially considering the significant structural changes in the tax system last year. However, customs duty increase from 10% to 20% across several consumer products will have an inflationary impact on these products.” Experts opine that consumers have already tightened there purse strings with limited discretionary spending, and demand in the sector has remained flat. In December, retailers announced early year-end sales to clear inventory, offering discounts as high as 50% to 70%. Kumar Rajagopalan, chief executive officer of Retailers Association of India, said, “There were no major announcements to trigger growth of the retail sector.
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There is no real additional money in the hands of the middle class with which consumption can improve. Overall, the Budget is pro-poor, and one with a long-term impact, but with no immediate benefits for the retail sector.” Madhu Kishore, business head, Ultra Toys & Gifts, which manufactures and imports different kinds of toys, said: “Import duty on all kinds of toys has been increased from 10% to 20%, hence subsequently increasing the MRP in retail stores and other outlets. This will have both short- & long-term impact on the industry as a whole.” However, manufacturers of these products are happy about the decision and feel the increase in the import duty will help drive the growth of domestic products. Siddharth Sood, co-Founder of Wildcraft, said, “The Budget is good for manufacturing companies like ours with incentives for job creation.
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At Wildcraft, we have already begun investing resources and focusing towards designing, manufacturing and technology-led initiatives. This will help us not only improve our offering, but will also create more jobs, in addition to 4,000 associates that we currently employ…”