Retailers Association Seeks Consumption-Led Growth and Tax Relief in Budget 2026-27
The Retailers Association of India has submitted detailed Budget 2026-27 recommendations focusing on consumption-led growth and tax relief measures. The retail sector contributes close to 10% to GDP and employs nearly 50 million people, with market projections showing growth from $1 trillion to $2 trillion by 2032. RAI seeks improved financial access, digital payment support, implementation of National Retail Policy, and regulatory reforms to strengthen the sector's economic contribution.
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The Retailers Association of India (RAI) has presented comprehensive recommendations for the Union Budget 2026-27, calling for policy measures focused on boosting consumption, increasing disposable incomes, and implementing long-pending reforms to strengthen the retail sector's economic contribution.
Retail Sector's Economic Significance
RAI emphasized the retail sector's crucial role in India's economy, highlighting its substantial contribution to both GDP and employment. The association outlined the sector's current economic impact and future growth projections.
| Parameter | Current Status | Projection |
|---|---|---|
| GDP Contribution | Close to 10% | - |
| Employment | Nearly 50 million people | - |
| Market Size | $1 trillion | $2 trillion by 2032 |
| Consumer Base | 1.4 billion people | - |
The retail sector stands as the second-largest employer after agriculture and ranks among the fastest-growing sectors in terms of job creation.
Consumption-Led Growth Strategy
RAI advocated for anchoring the next phase of economic expansion in demand and consumption-led growth. The association argued that boosting household purchasing power through lower personal taxes and targeted relief measures would create immediate and broad-based impact on consumption. According to RAI, higher disposable incomes would improve consumer sentiment and generate multiplier effects across manufacturing, logistics, services, and employment sectors.
Financial Access and Credit Support
The association identified access to affordable finance as a critical concern, particularly for MSMEs and independent traders facing high borrowing costs and limited credit availability. RAI's financial sector recommendations include:
- Creation of a dedicated retail or trader finance scheme through SIDBI
- Establishment of a separate fund for retail MSMEs
- Easing of select lending norms to improve credit access for small retailers
- Support for expansion, modernization, and formalization of operations
Digital Payment and Technology Initiatives
RAI highlighted the significant growth in digital transactions, particularly UPI-led payments in semi-urban and rural India, where transaction volumes have increased more than six-fold in recent years. The association's digital transformation agenda encompasses:
Payment Infrastructure
- Continued support for digital payment technology innovation
- Promotion of low-cost, convenient payment methods
- Waiver of merchant discount rates on debit card transactions
Technology Adoption
- Subsidized or reimbursed point-of-sale systems for small retailers
- Certified, secure hardware and software incorporating accounting standards
- Enhanced inventory management and real-time sales tracking capabilities
Policy Framework and Regulatory Reforms
RAI called for several structural reforms to improve the business environment for retailers:
National Retail Policy
The association urged early formulation and implementation of a comprehensive National Retail Policy to address regulatory complexity and uneven implementation across states. This policy framework aims to improve ease of doing business and encourage both domestic and foreign investment.
MSME Framework Parity
RAI sought full parity for retail and wholesale traders under the MSME framework, extending all MSME benefits to strengthen formalization and support long-term growth.
Model Shops and Establishments Act
The association recommended faster adoption of the Model Shops and Establishments Act 2016 across states. States like Maharashtra and Gujarat have already implemented this Act, enabling 24×7 operations and boosting employment and consumer convenience.
Sector-Specific Recommendations
RAI proposed recognizing food and beverage retail as a priority and essential service, seeking policy support through preferential land allotment and subsidized utilities such as electricity. The association also recommended reintroducing the EPCG scheme for the retail sector to support modern infrastructure creation through concessional import duties on capital goods.
RAI concluded that targeted policy interventions in the Union Budget 2026-27 could significantly accelerate economic growth, employment generation, consumption, and formalization, reinforcing retail's role as a cornerstone of India's economic development.
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