The government may have finally hit upon an idea to resolve the politically sensitive issue of large retail chains and small shops coexisting in harmony. The department of industrial policy & promotion (DIPP) may support the levy of a cess on large, organised retailers like Reliance Retail, AV Birla Retail, Bharti Retail and the Future group. The funds collected would be used to provide cheaper credit to small, unorganised retailers.

Official sources said that the cess could be either on the turnover of the companies or on the basis of the area of the outlets. Details of the proposed cess are yet to be decided. However, large retail operators are not enthused by the idea.

An official with one such retail company said that any cess levied on them would be unfair and against the tenets of fair competition. What is worrying retailers is the further squeezing of wafer-thin 4 per cent margins.

The proposal comes at a time when economic think-tank Indian Council for Research in International Economic Relations (Icrier), which is conducting a study on the impact of organised retail on the unorganised sector, has identified finance as the main issue of conflict between the two. It feels that if a level playing field with regard to finances is created vis-a-vis large and small players the conflict, recently witnessed in the form of vandalism at retail outlets, could be avoided in future.

The Icrier study, expected by the end of the month, is expected to suggest ways and means to offer cheaper credit to unorganised retailers. Even bankers feel there are many among them who understand the importance of micro-finance and are ready to play the role of financial counsellor to small shopkeepers.

... contd.