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RAI asks finance ministry to extend ECLGS benefits to retailers

30
Apr '21

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Retailers Association of India (RAI) has urged finance minister Nirmala Sitharaman to extend the benefits of the emergency credit line guarantee scheme (ECLGS) to retailers amid the second wave of COVID-19. It has also asked for a moratorium on principal and interest on loans for 6 months as 80 per cent of the stores remain closed due to various restrictions.

The retail industry represents an investment of ₹2,50,000 crore and close to ₹75,000 crore would turn into non-performing assets (NPA), if the Reserve Bank and the Centre do not take urgent measures to address the working capital challenges, RAI said, according to media reports.

"Retail businesses across the country are among the worst hit as several states have mandated lockdown of malls and shopping complexes where most modern retailers operate. The industry is finding it hard to survive through the immense financial stress that is threatening to derail businesses," the association said in a statement.

RAI has recommended that the government and the Reserve Bank take appropriate action to bring some relief to the retailers of the country. In a submission made to the ministry of finance, the association asked to extend the benefits of ECLGS 3.0 to retailers as additional funding can help them revive their businesses, protect jobs and generate employment.

The situation has put about 3 million jobs at risk in the retail sector and can impact the associated sectors that depend on it. RAI added that close to 10 million jobs in the textiles sector are at risk.

RAI has also urged RBI and the ministry to raise the working capital limit by 30 per cent and reduce the interest rate on loans to 6 per cent through mechanisms like interest subvention schemes.

Kumar Rajagopalan, CEO of RAI, said that the cash flow of the industry is at a standstill while operating costs continue to be the same. The industry will find it hard to survive the second wave of the pandemic, if relief packages are not provided by the government.

Fibre2Fashion News Desk (KD)

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