In a major announcement that promises to revolutionize India's retail industry and improve "ease of doing business", the Modi government has cleared the Model Shops and Establishments (Regulation of Employment and Conditions of Services) Act 2015. This will allow all public amusement establishments with at least 10 employees -- such as restaurants, local markets, shopping malls and movie theatres -- to operate 24x7.
This Act will have to be implemented by states. Once this is done, offline retailers operating in those states will stand to benefit hugely as the Act brings them on a more level-playing field with online retailers (who operate round the clock). This will intensify competition between physical and virtual players, while also benefiting consumers and the workforce.
In mature economies, students and unskilled/ semi-skilled people benefit from employment in retail. The same trend is being observed in India and it is only bound to increase as women have now been allowed to work 24x7. Companies will be mandated to facilitate the participation of women with safe transportation services and facilities such as crèches during night schedules.
Maharashtra and Andhra Pradesh have already unveiled their new retail trade policies -- in early 2016 -- modelled along the lines of this Act. Media reports also highlighted industry expectations of more states following Maharashtra's footsteps in thrashing out state-level retail policies. States such as Telangana, Rajasthan and a dozen others are expected to announce their respective policies this year.
The retail sector accounts for about 15% of the country's GDP and this is expected to increase further with round-the-clock operations. Just a few days ago, the government announced reforms to loosen restrictions on inbound investments in retail. Single-brand retailers like Swedish furniture giant IKEA and smartphone manufacturer Apple stand to benefit. JLL had first announced late last year that 2016 could see single-brand retail stores opening up.
These announcements -- coupled with high private equity inflows into the retail real estate -- look very promising. "Acche din" now seem close at hand for Indian retail as well as the retail real estate industry.
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