RAI Budget 2026–27 Recommendations to Drive Retail Growth

India’s retail sector—one of the strongest pillars of the national economy—has emerged as a critical driver of consumption, employment, and formalisation. As the Union Budget 2026–27 approaches, the Retailers Association of India (RAI) has submitted its Budget Recommendations, calling for targeted policy measures to unlock the sector’s full growth potential.

Retail currently contributes close to 10% of India’s GDP and supports a market valued at USD 1 trillion, which is projected to double to USD 2 trillion by 2032, backed by a consumer base of nearly 1.4 billion people. Beyond economic output, retail plays a vital social role, directly and indirectly employing around 50 million people, making it the fastest-growing employment sector and second only to agriculture in direct job creation.

RAI emphasises that modern retail strengthens transparency, improves tax compliance, and enhances government revenues. With appropriate policy support, the sector can significantly advance the Government of India’s vision of inclusive and sustainable growth.

Key Budget Recommendations at a Glance

RAI has urged the government to:

• Accord special focus to retail as a long-term growth engine
• Prioritise demand- and consumption-led growth
• Increase disposable income through targeted tax relief
• Recognise Food & Beverage (F&B) retail as a priority and essential service
• Expedite the National Retail Policy
• Extend full MSME benefits to retail and wholesale traders
• Promote digital payments through MDR waivers or subsidies
• Support technology and digital upgrades for MSME retailers
• Allow 150% depreciation on new capital investments
• Reintroduce the EPCG scheme for retail infrastructure development

Boosting Consumption and Demand

RAI stresses that sustained economic growth hinges on strong consumer demand. Lower personal taxes and targeted fiscal relief can enhance disposable incomes, strengthen consumer sentiment, and directly stimulate retail growth. Consumption-led growth, the association notes, delivers multiplier effects across manufacturing, logistics, services, and employment.

The Budget should also focus on growth-oriented reforms, simplified regulations, skill development initiatives, and rationalised GST norms to further improve ease of doing business in retail.

Improving Access to Affordable Finance

High borrowing costs continue to constrain retailers, particularly MSMEs and independent traders. RAI has proposed:

• A dedicated budgetary announcement for low-interest retail financing
• A specialised retail and trader finance scheme through SIDBI
• Creation of a dedicated fund for retail MSMEs
• Relaxation of select lending norms to improve credit access

These measures would strengthen financial inclusion for millions of small retailers nationwide.

Strengthening Digital Payments Adoption

Digital payments—especially UPI—have transformed retail transactions, recording over 650% growth in semi-urban and rural India. To accelerate this shift, RAI has recommended continued support for innovation in digital payment technologies, promotion of low-cost payment solutions, and waiver of MDR on debit card transactions. These steps would reduce cash dependency while enhancing efficiency and transparency.

Recognising Retail as an Essential Service

RAI has called for the Food & Beverage (F&B) retail segment to be recognised as a priority and essential service. Proposed measures include preferential land rates, subsidies on utilities such as electricity, and policy support comparable to other essential services. Such recognition would reinforce food security, employment stability, and consumer access.

Fast-Tracking the National Retail Policy

A unified National Retail Policy remains a long-standing industry demand. RAI believes its early implementation would reduce regulatory complexity, improve ease of doing business, encourage investment, and create a balanced framework supporting both modern and traditional retail formats.

Extending Full MSME Benefits to Retailers

While retail and wholesale trades are eligible for MSME registration under Udyam, benefits are currently limited. RAI has urged that retail MSMEs be granted access to all MSME incentives, aligning them with other sectors.

Technology Enablement for MSME Retailers

Technology adoption—particularly Point of Sale (POS) systems—is essential for retail modernisation. POS systems improve managerial control, enable real-time inventory tracking, support customer data management, and ensure transparent billing. RAI has proposed subsidies or reimbursements for POS systems, certification of secure hardware and software, and embedded accounting and audit standards.

Encouraging Adoption of the Model Shops & Establishments Act

The Model Shops & Establishments Act, 2016 enables 24×7 operations, supporting employment and consumer convenience. While some states have adopted it, RAI has urged broader implementation across India. Additional support measures include free or subsidised EDC machines and ensuring that digital payment costs do not exceed cash-handling expenses.

Reintroducing the EPCG Scheme for Retail

To support modern retail infrastructure, RAI has recommended reinstating the EPCG Scheme for the sector. This would offer concessional duty benefits for capital goods imports, applicable to retailers with a minimum store area of 1,000 sq. metres.

Looking Ahead

With focused fiscal and policy interventions, RAI believes the retail sector can significantly accelerate economic growth, employment generation, consumption, and formalisation. The association has reiterated its commitment to working closely with the Government to unlock the full potential of India’s retail ecosystem.