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Future Retail To Offer GST Discounts, Small Traders Will Protect Margins

Come GST, smaller traders will continue selling at the maximum retail price till the new stock arrives.

An employee packs goods into a plastic bag at a checkout counter of a Big Bazaar hypermarket, operated by Future Retail. (Photographer: Dhiraj Singh/Bloomberg)
An employee packs goods into a plastic bag at a checkout counter of a Big Bazaar hypermarket, operated by Future Retail. (Photographer: Dhiraj Singh/Bloomberg)

India’s largest hypermarket chain Future Retail Ltd. will offer discounts as the Goods and Services Tax kicks in while smaller traders will continue selling at the maximum retail price till the new stock arrives.

Future Retail will keep its stores open past midnight for the first two hours of July 1 to mark the rollout of the GST, its spokesperson told BloombergQuint. The retailer will immediately pass on the benefit of lower rates to consumers and prices are expected to fall in the range of 2-22 percent, the spokesperson said.

Retailers will adopt different strategies to deal with the transition, said Kumar Rajagopalan, chief executive officer of Retailers Association of India. Some may cut prices while others may sell at maximum retail price till the new stock hits the market, he said.

Among India’s most ambitious reforms, the new universal indirect tax subsumes multiple levies into one. While rates on several daily-use items will come down, smaller retailers and bulk dealers have expressed fears about higher compliance costs and short-term pain.

The mom and pop stores that BloombergQuint spoke to said they will not want to take a hit on their margins.

“I have stocked up on products for a few days and will buy the rest only after the new stock hits the market with new pricing,” said Arif Agewan, owner of Sagar General Stores at Lower Parel. Till then, he will continue to sell at the current price tag on products.

Bulk dealers have been cutting stock in the run up to GST rollout fearing losses. The supplies may fall further in the last two days before the new tax is implemented.

Distributors have stopped supplying products and the grain market and transport services will remain shut for two days, said Vinay Singh, owner of the Good Morning Kirana Store which is a stones throw away from Sagar General Stores. To beat such short-term challenges, Singh has stocked up for 15 days.

Vipul Chheda, owner of Chheda Tea Centre in the same area, also said that he will continue to sell products at MRP and won’t take a hit on margins.