Monday, January 06, 2014: The Confederation of All India Traders (CAIT) is a national body of the trading community in India. Formed in 1990, the association is affiliated with more than 20,000 trade associations across the country. From village talukas to metros, the association has been constantly working for the upliftment of traders, by putting forward their problems to the government. In a conversation with Electronics Bazaar, Praveen Khandelwal, national secretary general, CAIT, highlights the negligent behaviour of the government towards the traders of India.
EB: What are the major traders’ issues in India?
Multiple taxation is the biggest problem that the traders are facing today. A trader has to pay numerous taxes such as value added tax (VAT), income tax, excise duty, customs duty, other local municipal taxes, transportation tax, pollution tax, etc. All these taxes involve several formalities and detailed paper work accompanied by detailed disclosure of information, which is too lengthy and time consuming. For traders, the maximum time is consumed in taxation formalities.
Taxation, as we all know, has become the major den of corruption in the country today. Before introducing a tax, the government never thinks whether the community on which the tax has been imposed will be able to comply with it or not.
VAT poses a major problem for traders, who do not get any refund from the VAT department. They also have a problem in procuring Form C. Besides, every state has its own set of rules and formalities for VAT, which creates additional problems for traders.
Procuring trade licences from the municipal corporation is another problem for the traders, as it is the most difficult licence to procure. There are again several formalities and additional paper work involved. A trader has to provide several documents documents to prove that his business is legal. We recommend that the government enables the procurement of this licence from its website and allows online payments for this. But the government will not do this because the authorities extract maximum bribes in relation to these licences.
Traders are apprehensive of the lengthy taxation process. They are made answerable to various authorities and even have to pay bribes to all of them. To get rid of these malpractices, it is necessary that the government makes the system transparent. This will help the government to earn good revenue. Until and unless the government takes up taxation as a priority issue and brings about single taxation instead of multiple taxes, these anomalies will be there.
Other than this, there are many other small issues like the lack of public conveniences for the traders and consumers in the market area, especially for women. We have spoken to the government several times but our pleas fall on deaf ears.
Security in the market area is another major concern for traders across India. The government should develop a mechanism with the traders and police administration to curb theft and looting in the market areas. Lack of parking space and the huge traffic inflow are some other general causes of concern for the traders.
EB: What solutions do you propose for these problems?
We have been constantly following up with the government to resolve these issues but traders and trading is not on the priority list of the government, neither among the bureaucrats nor the politicians. We have raised our voice through dialogues and even agitations. This year, in March, we launched several protests against Foreign Direct Investment (FDI) and the Free Trade Agreement (FTA), and in response to our agitation the government has put the two policies on hold.
Also, we have been regularly talking to the local governments and other state chapters regarding different issues. These problems crop up continuously. Even if they are resolved once, they crop up as soon as other officials or political leaders take charge of the area. They amend the rules as per their own wishes. So, the issue remains unresolved forever. This occurs because there is no policy, scheme or act for traders, and hence, rules are mended or bent as per the whims and fancies of the authorities. If a policy is in place, whatever amendments happen, will have to be within the limitations of that policy.
EB: What, according to you, ought to be the mechanism for handling problems of traders across India?
The introduction of a single taxation mechanism is the only answer to all problems. When you are answerable to one authority, there is more transparency, the work is streamlined, more systematic work is done, more revenue is generated and there is less corruption. Today, we have nuclear families and one person cannot do so much of work of filing forms, submitting bills, etc. So, single taxation will help the tax payer to avoid paying taxes to various bodies. This is not just beneficial for tax payers but also for the government.
EB: Do you believe in a one-stop solution for the problems of traders across India?
The government boasts of its e-governance but there is no co-ordination among the various government departments. Government processes are not streamlined; traders furnish the same information to various departments like VAT, income tax, customs, excise, municipal corporations, etc. This is a clear proof of failures in the government’s mechanisms. There is no co-ordination among the various wings of the government and because of this failure, traders suffer. Filing taxes and returns is such a lengthy and cumbersome process that the traders get tired. If we have just one mechanism through which the government can procure all information, it will be a relief for tax payers as well.
EB: In the absence of government schemes and policies for the traders, do they face problems in arranging for funds?
There are absolutely no financial benefits for traders. There are policies for farmers and a separate ministry for them; there are policies for labour and a ministry as well. It’s only the traders who have been ignored completely, despite this community contributing 15 per cent to the total GDP of the economy; this sector is growing annually, on an average, by 50 per cent, and contributing revenue of Rs 2000 billion per year.
Unlike farmers who get loans at a primary lent rate (PLR) of 4 per cent, traders enjoy no such benefits. They have to borrow at general rates of interest from the banks or else opt for loans from the open market. Collateral-free loans should be made available for traders so as to give them some benefits. Depending upon the working capital or sales turnover of the trader, banks and financial institutions should provide collateral-free loans.
EB: Has CAIT raised this issue with the government – for it to formulate special schemes for traders, in order to render financial help?
We have been pressurising the government to formulate schemes for traders. If not schemes, at least it should provide loans on a PLR basis.
EB: What steps has the association taken for the betterment of traders?
We have been in constant dialogue with the government and we have recommended the setting up of a Ministry of Internal Trade, both at the state and central levels. Also, policies should be made both at the central and state levels and, for that, a trade board needs to be set up, which will comprise both government officials as well as representatives from the trader community. Once we have this, all problems will be resolved automatically. Formulation of policies is important, but their effective implementation and regular monitoring is also very necessary.
In January this year, we have formed the CAIT Woman Entrepreneur Association. According to our research, in India, 35 per cent of entrepreneurs in the trading community are women.
EB: CAIT has set up retail schools to educate traders. Please elaborate.
Our basic aim while setting up these retail schools is to educate and upgrade traders about technological advances happening in the trading and marketing community. Unlike the traditional methods, trade today has become more specific, focused and customer oriented. Consumers today are very intelligent and know where to invest their money; hence, the trader should be focused in ensuring that the requirements of the consumers are met.
A trader should ensure that the consumer gets value for money. We train the traders to upgrade and use modern marketing and selling techniques. We also groom them on behavioural patterns in order to maintain long-term relationships with their customers. We train them to evaluate and analyse their sales figures on a monthly basis and find out the reasons for not meeting their sales targets.
We also train them to identify the areas where they need to upgrade their infrastructure or services. We hire retail professionals to carry out this training.
EB: In how many states are you running these schools, and how many traders have enrolled in them so far?
We are running these schools in every state. There is a particular unit of CAIT in every state that looks after this retail school. Depending upon the requirement of the state, the classes are arranged. In Delhi alone, we have trained 5000 traders so far. We are yet to evaluate the total number of traders trained nationwide. We will assess this in the month of August during our annual meeting.
EB: How are you helping SMEs to compete with the MNCs?
The prevailing conditions do not provide a level playing field for the small traders to compete with the multinationals, as the latter are both technically and financially more sound. When they enter the Indian market, for the initial few years they enter with a loss-sustaining capacity. By incurring losses for a few years, they cut out competition from the market and thus uproot small players. Hence, we have been fighting with the government not to introduce FDI in India. This will lead to unhealthy competition in the market.
EB: What is CAIT’s stand on LBT?
As far as the local body tax (LBT) is concerned, we had recommended that the government merge it with value added tax (VAT) like the Gujarat government has done. Traders are not afraid of the tax but are hesitant about the several authorities that they will have to report to. Traders have to keep an accounting system for VAT, and with the introduction of LBT, traders will have to maintain yet another accounting system, which is legally wrong. For one product, you cannot apply two accounting systems. The government has never been transparent in its workings. There is no scientific study done before levying taxes.
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