Retailers Association of India urges FM to step in with relief package for retailers

Our Bureau New Delhi | Updated on April 28, 2021

Eighty per cent retail stores are closed due to restrictions by States due to the second pandemic wave

With retailers and malls facing various restrictions across States due to the second pandemic wave, Retailers Association of India (RAI) has appealed to the Finance Minister for urgent intervention in order to prevent the sector from slipping into irretrievable financial damage.

Stating that retail businesses are the worst hit, the industry body said that the sector is finding it hard to survive through the immense financial stress and it is imperative that the Government steps in with requisite support.

Kumar Rajagopalan, CEO, Retailers Association of India, said, “As of now, almost 80 per cent of the retail stores are closed due to various restrictions across States, and the few stores that remain open, do not have footfall. The cash inflow of the industry has come to a standstill, while the fixed operating costs remains intact. With zero revenues, retailers are still expected to pay overheads such as salaries, electricity and rentals. If a timely relief package is not provided by the Government to ease the financial stress, then the industry will find it hard to survive this second wave.”

Emergency Credit Line Guarantee Scheme

In a submission to the Ministry of Finance, RAI has recommended that the Government should extend the benefits of ECLGS 3.0 ( Emergency Credit Line Guarantee Scheme ) to retail companies also. Stating that the sector has not been announced as the beneficiary in the notification of ECLGS 3.0, RAI has urged the Government to make funds under the scheme available to the retail sector.

“The retail sector represents an investment of ₹2,50,000 crore and almost ₹75,000 crore could turn NPA if urgent measures to ease the working capital challenges are not taken by the Reserve Bank of India and the Government of India,” the industry body said adding that the RBI should announce a moratorium on principal and interest of all loans for up to 6 months.

Stating that almost 70 per cent of retailers’ expenses are salaries and lease rents, RAI also asked the government and the RBI to mandate banks to increase the working capital limit for retailers by 30 per cent to help them pay salaries and suppliers.

“To help the industry deal with the higher interest burden, interest rates on all loans to retail industry should be reduced to an effective rate of 6 per cent through suitable mechanisms such as interest subvention schemes,” RAI added.

Published on April 28, 2021

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