Maharashtra’s new retail trade policy: A potential boon to retailers, JLL report

The following is the report by Ashutosh Limaye, National Director – Research, JLL India

Considering retail to be an essential amenity, the Maharashtra state Government recently shared the draft of a new retail trade policy. To help retailers achieve optimal potential, the state Government has suggested making some exceptions and relaxations in the current regulatory framework. Among the key suggestions is the introduction of retail entertainment zones (REZs).

·Appointment of nodal officer to facilitate single window clearance
·Treating distribution centres at par with other industries
·Exemption from agricultural produce market committee (APMC) regulations
·Rationalisation of power tariff for retail businesses
·Formation of an ’empowered committee’ at the state-level to monitor the implementation of this policy, develop procedures and make amendments whenever, and wherever, required.

Why REZs are needed

The development control regulations (DCR) shall reserve spaces for retail and entertainment on the same lines as reservations for essential services and restaurants, in order to make retail more affordable. Currently, the urban policy does not clearly reserve spaces for shopping and recreational needs of citizens, so shops tend to be set up in a haphazard manner. More importantly, shops compete for spaces in commercial locations, which are extremely expensive and untenable for the retail industry.

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Creating a zone for retail and recreation will help increase consumption and simultaneously raise the standard of well-being of citizens. With this new policy, the state Government will aim to recognise the need for shopping and recreational areas to create a much-needed balance between residential, commercial, industrial, shopping and recreational areas in urban places.

Accordingly, efforts will be made to:

·Provide retail areas with direct access to mass public transport systems,
·Secure a traffic plan designed for the long term,
·Ensure year-round electricity, water, gas, sewage and IT connections.

REZs will be large retail developments where many big-box and other retailers will come together and give families an opportunity to spend an entire day out. The state Government will consider such a ‘retail park’ concept under its master plans to give the advantage of choice to consumers, increase competition (which will help reduce prices for consumers) and also reduce vehicular usage by eliminating the need to travel to different parts of the city merely to compare retailers.

These retail parks would preferably be adjacent to highways and have an integrated public transport system. This will support connectivity, ease traffic in and around the city, provide customer convenience and result in cleaner cities.

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Retail zones to figure in regional / Town planning

City master plans shall reserve land for retail development on the lines of Delhi, where they have been able to create specific centres in South and West Delhi for retail.

Benefits

1.Large malls of international standards require larger land parcels. Earmarked spaces in master plans will help them maintain high standards of development
2.The earmarked spaces for retail / entertainment development would also rationalise land prices
3.Infrastructure like roads, public transportation and power will be planned in advance.

Development control regulations

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Requirements for retail and other businesses are different, and there is a need to incorporate such specific business needs. The following modifications will be done to enhance viability and quality of development for retail centres:

·Higher ground coverage: Malls house various retail components across floors but customer movement reduces on the higher levels, making them less productive. Retail development shall be allowed higher ground coverage up to 70 per cent (subject to setback and fire safety regulations as also FSI norms being followed).

·Recreation ground: In a retail environment, organised players offer various types of recreational facilities and activities on a commercial basis. Such activities, within the applicable norms, should be allowed to set up in a ‘recreation ground’.

·Floor to floor heights: Retail developments, being public spaces, get crowded. The availability of higher floor-to-floor height allows the common areas and shops to look spacious and provide a relaxed and comfortable shopping environment to customers. The floor-to-floor height limit shall be raised to 5.5 meters, as is allowed in several other states.

·Parking norms: Malls, depending on their sizes and locations, receive a large number of vehicles. Limited parking space not only reduces the number of people visiting malls but also creates traffic hassles in and around them, leading to public inconvenience. The parking rules, which currently consider parking in excess of regulation as FSI, will be changed to allow larger numbers of car parks – without FSI implications.

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·Services: Unlike office spaces, retail spaces need more services due to movement of goods and customers throughout the day. Retailers need to replenish their stocks in the store to service customers’ needs, and thus require higher storage space in a mall. Moreover, to cater to large numbers of customers and to provide ease and comfort of movement, high capacity air-conditioning, escalators and lifts are required. 15 per cent of development will be allowed as services including storage areas in the basements, etc.

·Changes: Space requirements of retailers and demographic profiles of customers both keep changing. Changes in use of spaces – for example, from fashion retailing to restaurants to entertainment or vice versa, are frequently seen. To address these needs, spaces for retail and other uses will be allowed to amalgamate, divide or interchange with simplified approval processes.

·Building height: Currently, there is a height restriction of 30 meters for buildings that house a multiplex or auditorium. Retail developments generally do not work at higher levels. Therefore, to use the entire eligible FSI of the land, alternate commercial use like hotels, service apartments, offices, etc. are required to be developed on upper floors. Restrictions on building heights will be relaxed as done in neighbouring states.

·Additional FSI for retail zones: To enhance the viability and quality of development for retail centres, up to 50 per cent additional floor space index (FSI) will be admissible over and above the base FSI subject to payment of full applicable premium, as per the prevailing ready reckoner rates.

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