In his Pre-Budget consultation K M Mani, financial minister of Kerala has promised AKITDA to look into the online issue personally. The spate in online market has drastically reduced local sales in offline stores. In a pre-budget consultations called by the financial minister on 7th December 2013, AKITDA raised an issue of threat from online business.
The Pre-Budget consultation is intended to call representatives from industries, traders, media etc. to listen to their grievances and issues that they face in their respective fields. The representatives are expected to offer solutions to these problems which they expect from the government in the next budget planning.
Stakeholders are also expected to suggest areas for augmenting and mobilizing State's own revenue through taxes and non-tax sources. AKITDA elaborated on the benefit earned by online stores by selling IT products. Online stores do not bear VAT which amounts to 5% of the goods' price. VAT is earned by state governments on goods within sold within the state territory. This amounts to a considerable loss of revenue of the state government.
As Toshy Mathews, treasurer, AKITDA explains, "Online stores are exempted from VAT and hence their goods are already priced at 5% less than what channel partners have to offer." This renders them helpless as in no way offline stores are being able to offer a competitive price in comparison to what online stores offer. Mathews further explains, "Online stores have nothing to bear when it comes to establishments. They do not maintain a store. They do not have service support like us." He also complains that online sites buy products via grey channels. They often buy directly from vendors or imports from manufacturing sites. Hence the low price of IT goods.