Retailers urges consumption-led growth, tax relief and National Retail Policy in Budget 2026–27

As the government prepares the Union Budget for 2026–27, the Retailers Association of India (RAI) has called for a sharper policy focus on boosting consumption, increasing disposable incomes and accelerating

long-pending reforms to strengthen the retail sector’s contribution to economic growth and employment.

In its pre-Budget recommendations, RAI underscored the central role retail plays in India’s economy, contributing close to 10% of GDP and directly and indirectly employing nearly 50 million people. The sector, which is the second-largest employer after agriculture, is also among the fastest-growing in terms of job creation. According to the association, India’s retail market—currently estimated at around $1 trillion—is expected to double to $2 trillion by 2032, supported by a growing middle class and a consumer base of nearly 1.4 billion people.

RAI said the next phase of economic expansion must be anchored in demand- and consumption-led growth. It argued that boosting household purchasing power through lower personal taxes and targeted relief measures would have an immediate and broad-based impact on consumption, supporting not just retail but also manufacturing, logistics, services and employment. Higher disposable incomes, the association said, would improve consumer sentiment and act as a multiplier across the economy.

The association has also pitched for regulatory simplification and policy certainty to improve ease of doing business in retail. It flagged the need for rationalised and simplified GST norms, skill development initiatives and growth-oriented policies that recognise retail as a long-term economic driver rather than a fragmented sector.

Access to affordable finance remains another key concern for retailers, particularly MSMEs and independent traders who continue to face high borrowing costs and limited credit availability. RAI has recommended a special policy push to provide low-cost financing to retailers, including the creation of a dedicated retail or trader finance scheme through SIDBI, along with a separate fund for retail MSMEs. According to the association, easing select lending norms could significantly improve credit access for millions of small retailers across the country, helping them expand, modernise and formalise operations.

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Digital payments and technology adoption are also central to RAI’s pre-Budget wishlist. The association noted that digital transactions, led by UPI, have grown sharply, especially in semi-urban and rural India, where transaction volumes have surged more than six-fold in recent years. To sustain this momentum, RAI has called for continued support for innovation in digital payment technologies and the promotion of low-cost, convenient payment methods. It has also sought a waiver of merchant discount rates on debit card transactions to reduce cost pressures on small retailers and encourage greater acceptance of digital payments.

Beyond payments, RAI emphasised the need to accelerate digital and technological upgradation across the retail MSME ecosystem. Wider adoption of point-of-sale systems, it said, can improve inventory management, reduce pilferage, enable real-time sales tracking and enhance transparency in billing and taxation. The association has proposed subsidised or reimbursed POS systems for small retailers, along with certified, secure hardware and software that incorporate accounting standards and audit trails.

The association has also urged the government to recognise food and beverage retail as a priority and essential service. According to RAI, policy support in the form of preferential land allotment, subsidised utilities such as electricity and parity with other essential services would strengthen food security, support employment and improve consumer access, especially in urban and semi-urban areas.

A key structural reform flagged by RAI is the early formulation and implementation of the National Retail Policy. The absence of a unified policy framework, it said, has resulted in regulatory complexity and uneven implementation across states. A comprehensive retail policy could improve ease of doing business, encourage domestic and foreign investment, and provide balanced support to both modern and traditional retail formats.

RAI has also sought full parity for retail and wholesale traders under the MSME framework. While traders are permitted to register under Udyam and are eligible for priority sector lending, the association said other MSME benefits are not uniformly available to them. Extending all MSME benefits to retail and wholesale trade, it argued, would strengthen formalisation and support long-term growth.

In addition, RAI has recommended faster adoption of the Model Shops and Establishments Act, 2016 across states. The Act, which allows 24×7 operations, has already been implemented by states such as Maharashtra and Gujarat and has helped boost employment and consumer convenience. Wider adoption, the association said, could significantly enhance retail productivity and job creation.

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RAI has also pitched for the reintroduction of the EPCG scheme for the retail sector to support the creation of modern infrastructure through concessional import duties on capital goods.

With targeted policy interventions in the Union Budget 2026–27, RAI said the retail sector could significantly accelerate economic growth, employment generation, consumption and formalisation, reinforcing its role as a cornerstone of India’s growth story.