Back to Growth: Interview with Pavithra Anand Chugh, Head, Corporate Legal, Decathlon Sports India Private Limited
1. How do you see the major trends that you witnessed during COVID-19 in retail transactions and consumer trends in Retail & E-Commerce space to pan out in 2021?
Customers want a seamless experience on digital platforms (to bring in the same experience as being inside the store : interaction with people and product and not just "add to cart"). Importance (financial and regulatory ease) must be given to developing the digital ecosystem in India to encourage all Indians to experience digital shopping securely.
2. How have sector specific reforms (liberalization of FDI policy in Retail & E-Commerce, Digital India Programme, sourcing relaxations, digitization of customs, etc) helped the sector thrive and be resilient during the Covid19 period and what are some of the areas for further improvement.
The benefits and ease of e-commerce retail for single brand players was immensely important during the lock down of physical format stores. We have seen the growing demand by customers for technical products that single brand retailers may neither have in their global range nor have the technical expertise to produce such technically superior products. However, there exists a demand for such products. It is recommended to permit single brand retailers to have small percentage their range for other brands (referent brands in such technical products). This will not be the same as multi brand retail and will have no impact on the sector at large.
3. Retail & E-Commerce has a huge impact on the MSME segment through sourcing etc. How do you see foresee sourcing from India evolving in the coming period? Further, according to you, what policies can further boost sourcing from India?
Retailers are encouraging Make in India. However, India is still not considered a hub for the global market due to non-availability of raw material, higher lead time, lack of stability and compliance in MSME's factories (due to major financial reforms, lot of turbulence with small scale factories)
To boost sourcing from India:
a) Financial and social compliance of factories should be made mandatory
b) To make the documentation and approval(NOC) process simple to start a factory(single window clearance in all States)
c) Raw material availability - To reduce the import tax on the raw material which is not available in India
d) To establish footwear, plastic, metal process “industrial parks” for both, components and FG
e) To support and build more technical process capabilities( components, raw material, finished good product diversification)
f) Relaxation on corporate tax to retailers who are sourcing more than 70% from India will boost retailers to invest in India
g) Automation Labs (R&D) - to be at least 95% self-reliant to perform all testing parameters in India
h) To promote and sponsor more technical skill development programmes/trainings
4. Going ahead, what are the 3 most important things that you would want in budget 2021 for retail & e-commerce?
a) GST Refund for accumulation of Credits : GST laws do not allow for a refund where the tax rates on input services are higher than that on output and this leads to accumulation of credit with the company, blocking working capital.
It is recommended to allow a refund of accumulated input tax credit accrued on account of input services, capital goods. Further, as per the current scenario, GST credit is leading to blocked working capital. The companies should be allowed to use GST deposit or credit for payment of basic import duty.
b) Convergence of GST rates (to three slabs): Currently there are 7 rate slabs for goods (0%, 0.25%, 3%, 5%, 12%, 18%, 28%) and 5 rate slabs for services (0%, 5%, 12%, 18%, 28%). In addition, compensation cess applies on select goods. Government should consider converging the existing band of GST rates to three in line with international standards. This will help resolve interpretation issues, reduce complexity and probability of disputes.
c) Abolition of anti-profiteering provision in the GST Law: Given that the tenure of National Anti-Profiteering Authority was initially prescribed for a two-year period and with GST law largely been settled, it is recommended that the determination of prices should be left to the market forces and the provision of anti-profiteering in the GST law should be discontinued with prospective effect. The lack of guidelines on the subject is just adding to ambiguity in implementation of anti-profiteering provision by the industry.
* The views and opinions expressed above are solely of the interviewee. The content does not reflect Invest India's position or opinion and Invest India bears no responsibility for the same.