India’s retail market is estimated to reach $1.5 trillion by 2030 from $0.793 trillion in 2020, driven by factors such as urbanization and income growth. On the other hand, the Indian e-commerce industry is expected to cross the $350 billion mark by 2030, growing at a CAGR of 23%.
Driving the industry’s growth in India has been government moves on technology and digitalization, particularly around innovations, new digital payment methods/online wallets, and development of local logistics support.
Accelerated by the pandemic, India’s e-commerce industry is expected to grow by 84% to reach $111 billion by 2024. Similarly, Southeast Asia is on track to register an annual growth rate by 22%, reaching $146 billion by 2025.
Here’s what retail and e-commerce expect from Budget 2022
Saahil Goel, CEO of Shiprocket supported by Zomato
Right now, employees of startups have to pay taxes every time they sign up for ESOPs with a vesting schedule and also pay capital gains tax every time they redeem their ESOP. Current laws mandate ESOPs prematurely when options are exercised. ESOPs should only be taxed when an employee has realized a benefit in this regard. Taxation should follow actual earnings, not theoretical earnings. Additionally, there is a deduction of TDS by e-commerce operators on the sale of goods, which leads to a capital lock-in – which should be removed.
India’s logistics costs are high. Measures to subsume petroleum products under the GST regime have been under discussion for a long time – they will reduce fuel costs and progress must be made in this direction.
Kapil Makhija, CEO of Unicommerce
We expect the upcoming budget to focus on increasing digitalization in India’s Tier II+ cities. Young Indians in these regions have started to embrace e-commerce widely and if the government continues to focus on infrastructure, the potential for growth is immense. Additionally, we expect the government to further clarify the tax obligations of e-commerce companies and brands, as this will help them further streamline their operations.
Punishes Sindhwani, CEO, Paxcom
The past two years have been challenging, especially for small and medium-sized businesses, but have also presented opportunities for companies that have successfully adopted e-commerce and digital payments. For SMEs to survive and thrive, a greater push is needed to provide digital tools, training and advice. We look to the union budget for financial support/incentives especially for small and medium enterprises to help accelerate India’s digital vision.
Kapil Bhatia, CEO of UNIREC
Fashion startups expect the government to improve consumer disposable income as well as lower GST rates on ready-to-wear clothing. Current GST rates on ready-to-wear garments that cost more than Rs 1,000 fall under the 12% category and the government should reduce it to 5%. Along with lower tax rate, easier compliance and tax simplification are two of the major expectations of functional fashion startups in the market. Moreover, the main objective of the government should be to empower qualified and unqualified employees”.