Amidst the fast spreading COVID-19 and its impact on retail sector, Ameet Panchal, MD, Ethnicity, who is also an esteemed member of the Retail Association of India, has written to the Government of India for measures to support the industry.
Expressing gratitude to the Government for all the efforts to control the pandemic, Ameet has expressed worry over the mandatory closure of retail stores across India, which has consequently led to financial crisis/insolvency.
And that’s not all! Millions of jobs in retail are at risk, and therefore the retail industry needs support from Government of India.
The letter mentions how COVID-N19 has deeply affected retail trade as non-grocery/food retailers are reporting 80 to 100 per cent reduction in sales and to add to it, the economists have predicted that the impact on the consumption post lifting of lockdown will be lower by up to 25 to 30 per cent for 6-9 months.
The letter stated that retail Industry will find it difficult to survive current crisis due to high fixed cost, and closure of retail businesses will impact jobs and income for an even larger unorganised ecosystem. And therefore, relief has been sought to save the retail industry and commerce of India:
1. Special support required from RBI/Banking industry
a) Due to high inventory positions and low demand that will continue beyond the lockdown period, the industry will need longer support to survive. Banks must be mandated to extend the moratorium to 270 days for payment of installments & interest of term loans, short-term loans, corporate loans, securitised loans, bonds, mortgages, debentures, general purpose loans effective from 15 March 2020 to 31 December 2020.
b) Moratorium of 270 days for all interest payments of Cash Credit Lines up to 31 December 2020.
c) Non-fund sources such as bill discounting, letters of credit must be included in the moratorium.
d) Banks must mandatorily provide 25 per cent additional working capital credit lines, to tide over the shortfall due to no-revenues.
e) Additional working capital credit lines to be made available till 31 December 2020. Additional working capital credit lines to be paid back in 3 installments between 1 Jan 2021 and 31 March 2021.
f) RBI should recommend SEBI to relax share pricing norms for QIP and preferential allotment to help companies raise capital. Significant relaxation is also required for rights issue.
2. Interest Subsidy & Default Relief
a) Interest rates on all loans to retail industry to be subsidised/reduced by 400 basis point from 15 March 2020 to 31 December 2020.
b) Reserve Bank of India is requested to relax NPA reporting guidelines till 31 March 2021.
3. Relaxation in Statutory Payments/Accounts
a) Increase the period by 90 days for depositing all statutory dues, like Income Tax, Advance Tax, GST, ESIC, PF etc. for payments due up to 31 July 2020.
b) Extend the mandatory reporting/statutory filing days by 60 days to 31 July 2020 for financial accounts for the year 2019-20.
4. Employment Support:
a) Industry needs fiscal support to ensure no job losses in the Retail Trade. Towards this, we request a 4 month (March 20 to June 20) job support subsidy at 50 per cent of the minimum wages as cash support to encourage retailers to continue the employment of staff during the extended lockdown and recovery period after the lockdown is lifted.
The letter ended with the hope that the Government of India will give adequate consideration to the concerns highlighted in this representation in order to overcome probable adversities due to Coronavirus outbreak which may cause unprecedented hardship to the retail industry.