NEW DELHI: The retail sector of the economy has been constantly pushing for allowing foreign direct investment (FDI) in multi-brand retail. Analysts are of the view that in the Union Budget 2012, Finance Minister Pranab Mukherjee should provide clarity on the issue that has been in a state of limbo. The Economic Survey 2011-12 tabled by Pranab Mukherjee in the Parliament on Thursday also advocated the case for FDI in multi-brand retail.
The much-talked about FDI in multi-brand retail would come into effect in a “phased” manner, beginning from metropolitan cities, the Economic Survey 2011-12 said.
It said that allowing foreign direct investment in multi-brand retail is one of the major issues in the services sector, but the move would address problems relating to food inflation, low prices realised by farmers and investment gaps in post-harvest infrastructure for agricultural produce.
While the decision on FDI in the multi-brand sector has been suspended, the government has gone ahead with increasing foreign investment level in single-brand retail to 100 per cent from the earlier 51 per cent.
Retail players are also of the opinion that if organised retail is to grow at its own projected pace, the government needs to accord it an industry status first. The need for implementation of the Goods and Services (GST) tax has also been emphasized. Simplification of taxes and investment in infrastructure development has also been sought.
Dhara Sampat & Sarika Goel, Senior tax professionals in a member firm of Ernst & Young Global feel that the much awaited reduction/ abolition of Central Sales Tax (CST) would favourably impact the expansion of the organised retail.