National Retail Trade Policy in Focus: Why Govt is Holding Back on it Amid US Trade Talks?

The Centre may hold back the long pending National Retail Trade Policy amid various new interventions that has already been introduced by the government in the retailer welfare space.

Introduced back in 2019, the policy was brought in by the Department for Promotion of Industry and Internal Trade (DPIIT) to address the structural challenges faced by small businesses and traders due to the rising digitisation and platform-driven commerce.

As per officials, holding this policy back is likely amid various interventions in this space like the Open Network for Digital Commerce (ONDC), which provides open access to retailers. Speaking to Business Standard, a government official said, “Various interventions have been taken. The Open Network for Digital Commerce (ONDC) is one of them. There’s a National Traders’ Welfare Board, and we continue to have extensive interactions with them. So, from time to time, various initiatives have been rolled out, and the government has been addressing retailers’ concerns on a regular basis.”

What's the National Retail Policy?

A draft National Retail Trade Policy was in works over the last few years for streamlining retail trade and development of all formats of retail trade sector in a harmonious manner, with an aim to improve ease of doing business.

In addition to that, the policy, which is still in the policy stage aims to ensure easy and quick access to affordable credit, facilitate modernization and digitization of retail trade by promoting modern technology and superior infrastructural support, development of physical infrastructure across the distribution chain of retail trade, promote skill development and improve labour productivity, create large scale employment opportunities, provide an effective consultative and grievance redressal mechanism for the retail sector, for the welfare of traders and their employees.

Why is it Hanging For 4 years?

As of now, much of what was expected to be achieved under the National Retail Policy has been already implemented by platforms like ONDC and cooperative-led initiatives like the app-based taxi service ‘Sahkar’, an official told Mint.

After consultation with multiple ministries in 2022, the Cabinet approval and formal notification for the policy did not materialize and thereby, the draft remains pending nearly four years later. Due to the rolling out of several indigenous initiatives, the need for a unified retail stands negated.

According to Kuljeet Singh, chief financial officer at GI Group Holding, a staffing solution provider in the retail sector, delaying the National Retail Trade Policy can slow the momentum of employment growth in the retail sector.

In a conversation with Mint, he said, “The policy was expected to support small traders, shopkeepers, improve access to credits, and encourage formal job expansion. Without it, growth in some areas like logistics, warehousing, etc., may take a bit longer," Singh said. “However, in our view, retail will continue to provide jobs as it does today. This delay may be a missed opportunity but with the right steps taken later, the sector can still grow stronger,” he added.

Why is this Likely Just Before India-US Trade Talks?

The move comes ahead of the final talks for the India US bilateral trade agreement and is also viewed as a diplomatic gesture. This is because, putting the policy aside may directly benefit some major US-based retailers to peacefully operate in India without any additional regulatory oversight. These are mainly e-commerce platforms and global retail chains like Walmart Inc. Apart from the US based ones, domestic retail chains like DMart, owned by Avenue Supermart Ltd, Reliance Retail Ltd, and Tata Retail Ltd would also benefit from the policy shift.

With India’s e-commerce policy, originally due in 2023, pushed aside, officials are of the opinion that a separate retail policy is no longer necessary.