Cut in corporate tax for MSMEs to benefit ecosystem, says retail industry

The retail industry has welcomed the budget, saying that the government’s move to cut corporate tax for micro, small and medium enterprises (MSMEs) will benefit the ecosystem, boost the rural sector and increase domestic consumption.
Besides, doubling of allocation of funds for food processing sector will not only create greater wealth in the agricultural value chain but also create employment.
According to Walmart India, push to rural infrastructure development with measures like the hike in minimum support price will strengthen rural economy which would have a domino effect in pushing the growth of the Indian economy overall.
“Provision of corporate tax relief for MSME will benefit the entire ecosystem of small businesses, who are the engine of growth and employment generators. We are delighted to see that this move by the government will help these small businesses to prosper,” Walmart India president and CEO Krish Iyer said.
“We are confident that this budget will spur the domestic consumption and will accelerate economic growth across all sectors,” he added.
Finance minister Arun Jaitley on Thursday announced a series of measures for MSMEs in the budget, including lowering the corporate tax rate to 25 per cent for businesses with a turnover of up to Rs 250 crore and setting a target of Rs 3 lakh crore for lending under the MUDRA scheme in 2018-19.
Metro wholesale India MD and CEO Arvind Mediratta said that the move to reduce corporate tax would augment ease of doing business.
“The corporate tax rate reduced to 25 per cent for companies with turnover up to Rs 250 crore in 2016-17, will also majorly boost the micro, small and medium business ecosystem. This will augment the ease of starting own businesses while helping existing business also,” Mediratta said.
However, Shoppers Stop’s customer care associate and managing director Govind Shrikhande said that the increase of almost 10 per cent in custom duty on products like perfumes, toiletries, sunglasses and footwear would have a “significant impact” on consumption.
“This coupled with the introduction of 10 per cent long-term capital gain tax … in the equities market may dampen consumer sentiment,” Shrikhande said.
Retailers Association of India CEO Kumar Rajagopalan said that the budget is pro-poor and one with a long-term impact but with no immediate benefits for the retail sector.
“We do not expect any immediate impact on consumption, either negative or positive. There is no real additional money in the hands of the middle class with which consumption can improve,” he said.
According to Franchise India chairman Gaurav Marya, the government has addressed the key concern for MSMEs’ credit.
“I believe the government has truly given its due to the MSME sector that had been buckling under the pressure of demonetisation and GST,” Marya added.