The year 2020 was a year of uncertainty, fear ad challenges for companies across industries,not only in India but globally. Economic activities halted for the entire duration of the lockdownimposed by the government to contain the spread of the pandemic. While recovery in demand was seen during the festive season starting the month of October, sustenance of this demand is what the industry and the overall economy require right now in order to go back to the pre-Covid times, as we call it. Consumer spending, which is one of the most driving forces for global economic growth, is also falling drastically. All this and more has affected the overall licensing and retail industry and the forthcoming Union Budget 2021 is the only ray of hope for the falling industry.
Accordingly, the primary expectation from the budget include an appeal to the government to take steps to improve disposable income of consumers, reduction in Goods and Services Tax (GST) rate, aligning income tax slabs, and long-term reforms like formulating reforms/ laws that could facilitate ease of doing business, raionalisation of licensing process for new companies entering India, digitisation of the entire process of retail expansion or collaboration which will help the new entrants in obtaining licenses in lesser time and with ease. Anuj Kejriwal, CEO & MD, ANAROCK Retail, agrees, “The retail and even licensing industry was one of the worst-affected in 2020 due to the Covid-19 pandemic. Even though we saw some green shoots of revival in the festive quarter of Oct-Dec, the sustenance of demand is crucial for the revival of this industry in the near future. Therefore, it is imperative that the government announces measures that will help increase disposable income and thereby bolster demand. Besides, the government must rationalise the licensing process which inevitably will help in ease of doing business and also help new entrants. Other than this, we also expect the government to continue its digital push.”
Also, since there is huge under penetration of the organised retail industry in India, the industry is also expecting more focus on improving infrastructure, both physical and digital and removing supply chain inefficiencies to incentivise retailers to enter into remote areas of the country. This would also help international brands entering the country. Ishaan Sachdeva, Director, Alberto Torresi, says, “Foreign investors should be encouraged to invest in India by providing certain tax incentives. The government should make the procedure to licensing more quick and efficient, and should provide one step acceptance.Furthermore, imports are still lacking, as the businesses have unsettled after the pandemic. The government should provide subsidiaries and incentives for the establishment of new ventures, which can act as a substitute for imports. The government could also bear the costs of projects so that it attracts more and more people to set up their ventures, maybe in full, or at their maximum capacity.”
Clarity on National Retail Policy
Greater clarity on the implementation of the National Retail Policy, which will direct more focus on ease of doing business by rationalising the licensing process, improving infrastructure access and overall modernisation of all the processes, is also on the list of demands. Akhil Jain, Executive Director, Madame, maintains, “Hon’ble Finance Minister Nirmala Sitharaman has promised a 'never before' Union Budget to steer the pandemic-battered economy and push for growth, so it adds to the expectations. Besides other things like reduction in GST rate and personal taxes, incentivising consumption, consideration to the textiles ministry proposal to develop seven Mega Integrated Textile Region and Apparel (MITRA) parks by 2025-26, clarity on the implementation of the National Retail Policy, which proposes to focus on ease of doing business by rationalising the licensing process, improving infrastructure access and overall modernisation of retail among others, is also expected. This budget will be a benchmark on how the industry evolves and grows to post the most calamitous challenge the world has faced in a century.”
Stringent IP protection laws
Aadarsh Technosoft Pvt. Ltd. is a global Media & Entertainment, EdTech driven company and has developed popular Intellectual Properties like Purple Turtle which has exposure to 25 countries, among other properties. Talking about the overall licensing industry in India and the expectations it has from the upcoming budget, Manish Rajoria, Director, Aadarsh Technosoft Pvt Ltd., asserts, “Licensing is a service industry which helps the manufacturing industry tremendously. And going by the ‘Make in India’ campaign, if the government wants to boost manufacturing in the nation, they need to encourage licensing and this can be done by introducing the GST or also by making people aware what licensing really is. As one of India’s first IPs to go global, I want to appeal to the government to incentivise homegrown IPs with adequate support system, policies, laws, etc. Right now, we have very lax laws for IP protection.”
Reform in FDI policy
According to experts, the government might liberalise the FDI regime through this budget and raise the current FDI limits from 49 per cent to 74 per cent of paid-up equity capital. This would further bring more investment to the country. The Government’s twin vision of becoming a 5 trillion-dollar economy and building an ‘Atmanirbhar Bharat’ will depend on how we invest today. Manish Rajoria adds, “FDI policy reform is welcome because this will not only bring more money in the country but will also add a lot of value, in terms of experience of these organisations. I would also like to add here that licensing as an industry is at the cusp of growing and multiplying, and is slated to bring in a lot of investment which will ultimately increase local manufacturing giving boost to ‘Make in India’ campaign. My request to the finance minister is to introduce a package which would help or bail out companies who are into business of licensing and support them in whatever financial ways possible.”
Furthermore, since the overall industry – be it licensing or retail or manufacturing – has faced more challenges than ever before due to the pandemic and ensuing lockdown, its only natural that the country is looking forward to the Budget 2021 with much more anticipation and is hoping that this budget will be a way forward towards neutralizing the impact of Covid. All eyes are on the finance minister who is all set to present the budget on 1 February.