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‘Tax on rentals will impact retail’

Imposition of service tax on commercial rentals, as proposed in the Budget, will prove counterproductive, says Rajan Bharti Mittal, the newly appointed president of industry chamber FICCI. In an interview with Hindustan Times's Vivek Sinha, Mittal also stressed upon the gains to be had from allowing foreign direct investment in retail.

business Updated: Mar 07, 2010 22:38 IST
Vivek Sinha
Vivek Sinha
Hindustan Times


On the move to tax rentals
I do not think that rentals constitute a service. Service tax will increase commercial rentals, impacting not only the retail players but also the realtors, who might find it difficult to lease out space at higher rates. We intend to meet government officials and apprise them of our concern against levying this tax.

On FDI in multi-brand retail
Allowing FDI in retail will not only help create jobs but also have several spin-off effects, such as generation of ancillary stuff around manufacturing activities.

On concerns about contract farming
I believe farmers will reap a better produce and ultimately get better rates. I do not think that contract farming will do any harm.

On impact upon farmers in case of crop failure/ poor quality
Probability of crop failure (in contract farming) will be low, as the companies will be involved from the very beginning. Further, a company is likely to nurture a long term relationship with the farmers as compared to the transactional relationship of local mandis with the farmers.

On organised retail putting small shops out of business
There is enough room for both formats of retail to co-exist and flourish. Modern retailing still accounts for 10 to 20 per cent of the total market in counties like Brazil and China that have opened their retail sector for more than a decade.

First Published: Mar 07, 2010 21:26 IST