The Indian government may offer low-cost loans to small retailers and relax some of the regulations governing the sector. said two officials. While Prime Minister Narendra Modi is moving to bolster a large voter base that is losing business to the e-commerce giant.
The proposal, which could be announced next month in the final budget ahead of the 2024 general election, aims to revitalize growth in the micro-retail sector, which has been hit by the entry of companies such as Amazon, Flipkart, BigBasket, and BigBasket. Backed by Tata Group and reliant on the industry.
“The government is pursuing a policy that allows easy credit at low interest rates. Inexpensive and easy-to-find loans from inventory are among the options,” a government official, who declined to be named, told Reuters.
The Commerce Department did not respond to a request for comment.
The two officials did not detail how banks would be compensated for the cheap loans.
This policy replaces licensing requirements for new stores and renewals with a simple online process.
Retailers currently require between 25 and 50 different licenses, some of which need to be renewed annually, said Kumar Rajagopalan, chief executive officer of the Retailers Association of India (RAI).
small shop owner Shops selling household goods from vegetables to refrigerators are a key voter base for the Bharatiya Janata Party, but they have suffered a series of setbacks since Modi took power.
In an attempt to formalize the economy and increase the number of taxpayers, Modi banned high-value notes in 2016 and subsequently issued a goods and services tax that hit small businesses the most.
The pandemic has also caused the loss of small businesses as online giants have gained momentum. As a result, the government in 2020 is offering a one-year unsecured working capital loan of up to $123 to help street vendors start new businesses.
The share of e-commerce in the Indian retail space is expected to grow to nearly 19% by 2030 from 7% today, according to the 2022 RAI report.
“Many small retailers face shutdowns due to e-commerce platforms. We have proposed a similar solution to the problem that hinders the healthy environment,” said another government official.
($1 = 81.3650 Indian Rupees)
