Context

The Department for Promotion of Industry and Internal Trade (DPIIT) has sought the views of 16 departments and ministries on its draft national retail trade policy.

What is Retail Trade?

Retail trade is the selling of products and services to customers and includes all the aspects of the sale, such as installation, delivery and customer service.
In the context of commerce, retail must be a transaction between a business and a consumer.
If a local hardware store buys nails from a manufacturer, it is not a retail transaction.
An important term that is associated with retail trade is end-user. An end-user is the person or group who actually uses the product.

Wholesalers: Wholesalers are companies that buy large quantities of a product from the manufacturer and then sell them to retail stores. They are often called middlemen because they operate between the companies that manufacture goods and the companies that sell them to consumers.
Shipping: When a product is purchased from a manufacturer, it needs to get to the wholesaler and eventually to the retailer. Shipping is a big part of retail trade. Whether the shipping is bulk transport of goods from wholesaler to retailer or small shipments from retailer to consumers, shipping plays a vital role.
Service: When consumers purchase certain products for their home that require installation, the install process is part of retail trade. The same goes for the customer service that a consumer might need after they purchase the product or the repair service that might be required on a product that breaks.
Sales: One of the most important parts of retail is the front-end sales of the products. Successful retail involves people with knowledge of the products who can communicate with the consumers.

The main characteristics of retail trade are:-

Retailer is the last link in the distribution chain.
Goods or services are sold directly to consumers by the retailer.
Retailer deals with a wide range of goods.
Retailer buys and sells a little number of products.
Retailer maintains personal relations with the customers.
Retailer is generally located in residential areas.
Retailer may contact the customers on telephone, Internet, TV or through his retail showroom.
Retailer acts as a middleman between wholesalers and customers.

Make targeted efforts: This policy would focus on formulating strategies to provide a globally competitive and sustainable environment for the overall development of retail trade through targeted efforts.
Huge domestic market: India is the world’s fifth-largest global destination in the retail space.
Growth potential: According to a US-based report, the retail industry in India is likely to see 10 per cent annual growth to reach about USD 2 trillion by 2032.
Employment generation potential: Another report by CII-Kearney released in 2020 a cohesive national retail policy can help generate 30 lakh more jobs by 2024.

Unorganized market: India’s market for retail trade is largely unorganized. It lacks proper formal chains except few giants such as D-Mart.
High complexities: A number of laws, compounded by state-level variations in implementation, create immense complexity for retailers, especially those with a pan-Indian footprint.
Regulatory bottlenecks: If one has to set up a store in organized retail, we probably need approvals from 40 different authorities. Single window clearance could be largely beneficial.
Ignores e-commerce: While recognizing that retail trade in India is gaining strength because of e-commerce, this new draft is not applicable for e-commerce, multi-level marketing, direct selling or street vendors.

The policy has been envisioned by DPIIT to formulate the national retail policy to promote the growth of domestic trade.
It focuses on formulating strategies to provide a globally competitive and sustainable environment for overall development of retail trade through targeted efforts.
The broad objectives of the policy are:
Ensuring easy and quick access to affordable credit.
Facilitating modernization and digitization of retail trade by promoting modern technology and superior infrastructural support.
Development of physical infrastructure across the distribution chain.
Promotion of skill development and to improve labour productivity.
Providing an effective consultative and grievance redressal mechanism for the sector.

Promote EODB: This policy will streamline the retail trade and promote ease of doing business in the retail trade sector.
Skill enhancement: It will encourage skill development and create more employment opportunities for all sections of society involved in retail trade.
Infrastructure boost: It will identify and address existing infrastructure gaps affecting the retail trade industry.
Employment boost: It will leverage retail trade as a tool for socioeconomic development of the country. A cohesive national retail policy can help generate 30 lakh more jobs by 2024.
Investment inflows: It will accelerate investment flow to underdeveloped regions across the country. The retail industry is likely to see 10 percent annual growth to reach about USD 2 trillion by 2032.
Promoting small retailer: It will create a level-playing field for small sellers by providing them access to credit as well as help large, organized retailers with quicker approvals.

A cohesive retail policy built on the pillars of simplification, standardization, and digitalization will pave the way for significant growth and accelerate a short-term economic recovery.
The policy is expected to lay down broad contours of a “prescriptive” framework and States will also have a key role in implementation.