Hit by Covid-19 pandemic, Indian retail industry leaders seek government support to survive, revive and reboot

Debasish Chattopadhyay ; Kolkata , 23 rd April : The Retailers Association of India, the unified voice of Indian retailers on Wednesday presented its submission on the challenges faced by the retail industry represented by key members of its national council. It recommended a way forward to support the industry and the nation’s economy to help overcome the challenges brought on by the COVID-19 pandemic. The industry’s appeal to the government to help retail industry survive included stronger policy and fiscal interventions in the form of support for wages; moratorium for payment of principal & interests and support in the form of working capital.

“Retail industry employs about 46 million people, which sustains the livelihood of 250 million Indians. Food and essentials contribute to around 50% of the total, non-essentials contribute to the other 50%. Not opening non-essentials can have a serious impact on 20-25 million employees and 125 million Indians working in non-essential retail and millions of other Indians working in the total supply chain from manufacturing to logistics, wholesale & retail. India is all about consumption and retail is a gateway of consumption. If retail is not open, it’s going to have a serious impact on other sectors such as manufacturing, entertainment and artisans among others. If retail loses a million jobs, it will have a livelihood impact of at least 5 to 6 million,” said B.S. Nagesh, Chairman of RAI and Founder of Trust for Retailers & Retail Associates of India calling attention to the impact that the closure of retail will have on the economy at large.

Representing a wide array of businesses within retail were Kumar Rajagopalan, CEO, RAI, Kulin Lalbhai, Executive Director of Arvind Ltd; Rakesh Biyani, Managing Director of Future Retail; Sandeep Kataria, CEO, Bata India Limited; Rahul Mehta, Managing Director of Creative Garments Pvt. Ltd. and Chief Mentor & Former President of CMAI; and Atul Ruia, Managing Director of Phoenix Mills which has be largest mall space in the country. Together they presented their expectations from the government and their suggestions on what’s critical to survival, revival and rebooting the industry and, in effect, the economy.

“The key to resetting the economy is to get cash generation going. Exports will not be a silver bullet for India. Driving domestic consumption in a safe way is going to be important. A large part of retail is based in non-essential items; we must revive that, even as we continue providing for essentials. The industry will need handholding in the form of financial support for around 6-9 months to emerge from the crisis. The key thing is to ensure safe shopping and modern retail is in an excellent position to do that. Malls can have best standard operating procedures to ensure social distancing; they can be the safest way to shop. To enable all of this, the government and the industry must partner closely with each other,” said Kulin Lalbhai, Executive Director, Arvind Limited.

RAI’s asks from the Government for the Retail Industry:
• Help retain jobs through wage subsidies up to 50% of wages of blue collared workers on salaries up to INR 25000 or minimum wages, whichever is higher
• Provide 25% additional working capital credit lines to pay salaries and wages on time
• Provide working capital loans to the extent of 2-3 months of sales at low interest and a moratorium of 6-9 months for repayment of loans. All earlier loans should get a similar moratorium
• Reduce GST across the board for retail to boost consumption and reboot the economy
• Revive consumption by opening all forms of retail in a safe environment
In line with the need to drive domestic consumption Sandeep Kataria, CEO, Bata India Limited, said, “We support the government on the graded opening of economic activities, including retail. But it is important that we open all channels of consumption, including malls. Only when consumption picks up can production happen at full speed. We need to open up modern retail so that the 4.5 million workers employed by the footwear industry can come back to work.”

Atul Ruia, Managing Director, Phoenix Malls, shared his perspective on malls being one of the safest places to shop. He added, “The back end of the industry cannot function if the front end isn’t operating. We could implement measures in Malls such as restricted operating hours (especially during non-peak hours); social distancing protocols; vacant seats between patrons in cinema halls; partitions between customers in restaurants; hand sanitizers and temperature checks at entrances; and masks for all retail staff. The tenants in malls are all organized retailers; they will abide by all such rules and best practices.”

Further stressing on the importance of opening all channels of retail, Rahul Mehta said, “Manufacturing and retail cannot do without each other. Opening manufacturing but not retail makes no commercial sense. Almost 90 percent of all manufacturing in the garment industry is MSMEs, and almost 50 percent of this workforce is women. The survey conducted by CMAI shows that 98 percent of members are concerned about the welfare of their workforce but don’t know how to take care of them; only 32 percent have funds to pay salaries for April; only 8 percent have funds to pay salaries for May; and only 5 percent for June. We need working capital support; wage support; and GST support from government. Around 90 percent of apparel retail is in brick-and-mortar format; opening them is vital for the survival of the industry.

For manufacturing and retail to survive, Rakesh Biyani, Managing Director of Future Retail, brought up the need for partnerships, “Strategic partnership with delivery services & market places, is going to be very important to service customers even after the lock down is lifted. Kirana stores have played a very important role during the lockdown. It is going to become very difficult, to kick-start the supply cycle, unless we receive the support of the government to capitalise the businesses”

In closing, Kumar Rajagopalan, CEO, RAI, reiterated the asks by saying, “Over the last few months, we have made many submissions to the government, and are working closely with them. The government has been very supportive. It is very important that the industry retains its employees; we have, therefore, requested the government and financial institutions to come together and provide a meaningful package for the retail industry’s survival during, and revival after, the lockdown.”

The RAI has sought support from the government in the form of working capital equivalent for at least 2-3 months of revenue to pay salaries to its employees, and a moratorium of up to 9 months on payments of loans. By further opening up retail, it will boost consumption in the country.
It can be noted that Retailers Association of India (RAI) is the unified voice of Indian retailers. RAI works with all the stakeholders for creating the right environment for the growth of the modern retail industry in India.