Interstate trade barriers: Indian retail sector perspective

Abstract

India is one of the fastest growing economies in the world. In the process of achieving this smooth and sustained growth rate the trade and commerce in the country plays major role. Industries go through the challenging times and some able to sail through, some dies. Indian retail one of the fastest growing industries in the country and is witnessing growth challenges. While the industry is showing growth, the economic slowdown and liquidity crunch now and then slows its growth pattern. The last few years witnessed immense growth in the Indian retail sector and there has been a chaotic activity in terms of entry of international labels, their expansion plans, and focus on more advanced technology, operations and processes. This has resulted into more complicated relationships which involve stakeholders such as suppliers, third party distributers and retailers, with existing interstate taxation mechanisms and corresponding monitoring system. Somehow this inter-state taxation system did not work very well in the interest of Indian retail. The problem can be solved by allowing free interstate trade across country i.e. the tax reforms and establishing efficient supply chain by the various players. It becomes important as India is a diversified country in every aspect, the resources are not evenly spread across the country some parts are agriculturally dominant whereas other parts are industrial oriented. The different states have their different trade policies and it may hamper the overall economy. In our study we would like to explore issues related to interstate trade in the Indian context and how current systems in other parts of the world can offer a lesson in the Indian context.