Govt may put retail trade policy on back burner as India-US trade talks enter final leg

Mint

4 days ago

New Delhi: The Union government is likely to put the proposed National Retail Trade Policy on the back burner, a move seen as a conciliatory gesture towards Washington as negotiations for the India-US bilateral trade agreement enter the final stretch.
The retail policy, which was first proposed in 2019, was meant to address structural challenges faced by brick-and-mortar traders and small businesses due to rising digitisation and platform-driven commerce.
Shelving the policy may indirectly benefit major US-based retail giants—particularly e-commerce platforms and global retail chains like Walmart Inc.—by allowing them to continue operating in India without additional regulatory oversight.
Domestic retail chains such as 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 to the sidelines, government officials said a separate retail policy is no longer necessary.
Much of what the National Retail Trade Policy set out to achieve is already being implemented through decentralised platforms such as the Open Network for Digital Commerce (ONDC) and cooperative-led initiatives like the app-based taxi service 'Sahkar', said a person familiar with the government's thinking.
'A policy is a set of actions—and those actions are being taken," this person said, citing ONDC's success in leveling the playing field across sectors.
'Creating compliances when the purpose has already been largely achieved doesn't make sense," said a second person. Both of them declined to be identified as the government hasn't made a final decision yet.
A US team of negotiators is scheduled to visit New Delhi in the second week of August to resolve the deadlock over contentious issues in the talks for the India-US bilateral trade agreement.
India has made several gestures, starting with the Union Budget, to improve the trade climate, but feedback from the US suggests that its focus remains largely on pushing for exports and greater market access for GM maize and soy-based products. The US's dairy industry also has been lobbying for access to India's vast consumer market.
Spokespersons of the ministries of commerce and consumer affairs, the Retailers Association of India, Amazon India, Walmart-owned Flipkart, Tata Group-owned BigBasket, DMart, and Reliance Retail did not immediately reply to emailed queries.
A missed opportunity
India's rapidly expanding organized retail sector is expected to reach $230 billion by 2030, Deloitte and the Retailers Association of India said in a joint report in February.
The report added that private consumption in India had grown from $1 trillion in 2013 to $2.1 trillion in 2024 at a compound annual growth rate of 7.2%, surpassing the growth rates of the US, China, and Germany.
A draft National Retail Trade Policy had been prepared to streamline and support the development of all formats of the retail trade sector in a harmonious manner, the ministry of commerce and industry informed the Lok Sabha on 22 December 2021.
According to the ministry, the policy aimed to improve the ease of doing business, ensure easy and quick access to affordable credit, facilitate modernisation and digitisation of retail trade, and develop physical infrastructure across the retail distribution chain.
The retail trade policy also sought to promote skill development to improve labour productivity, create large-scale employment opportunities, and establish a grievance redressal mechanism for the welfare of traders and their employees, the ministry had said.
'The policy has been in the works for a long time, and we have been waiting for it. The challenges in the sector—particularly those affecting MSMEs (micro, small, and medium enterprises))—must be addressed comprehensively through this policy," said Vinod Kumar, president of the India SME Forum.
The second unnamed person quoted earlier pointed to ONDC, an initiative of the commerce ministry's Department for Promotion of Industry and Internal Trade, as an alternative. The digital platform offers a bouquet of services, including ride-booking, food-delivery, and e-commerce.
'Sellers are getting onboarded without any hassle, making the process seamless," said this person.
According to data available on the ONDC website, about 64 million orders were placed in 2024-25 across 860 districts, and 166,691 vendors had been onboarded. Data for previous years was not available.
Kuljeet Singh, chief financial officer at GI Group Holding, a staffing solution provider in the retail sector, said delaying the National Retail Trade Policy may slow the momentum of employment growth in the retail sector.
'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."