Retailers Association of India writes to FM Nirmala Sitharaman to extend ECLGS benefits to industry

In its submission to the union finance ministry, retailers have asked the government to extend the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) to retail companies as well.

"Corporate retail outlets is one the 26 sectors, selected by the Kamath panel under the ‘Resolution Framework for COVID-19 -related stress'. While this was explicitly mentioned during the announcement of ECLGS 2.0, it has not been clarified in the notification which announced ECLGS 3.0. Availability of additional funding facility to the eligible retail business will go a long way in contributing to retail revival, protecting jobs, and creating a conductive environment for employment generation," RAI wrote.

Further, the association wants the Reserve Bank of India (RBI) to announce a moratorium on principal and interest of all loans for up to six months.

"Retail sector represents an investment of Rs 2,50,000 crore and almost Rs 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. This will put at risk almost 3 million jobs directly in the retail sector," it wrote in its submission.

RAI has also claimed that banks are not willing to provide working capital loans to retailers to meet the upcoming liabilities of salaries and rent and has urged RBI to instruct banks to increase the working capital limit for retailers by 30 percent to help them pay salaries and suppliers.

"Further to kick-start the supply chain, additional working capital be released to suppliers, who can restart factories and in another 8-10 weeks, the wheels of the economy can start moving ahead," it added.

RAI's final submission to the union finance ministry is the reduction of interest burden by reducing interest rates on all loans to the retail industry to an effective rate of 6 percent through interest subvention schemes.

"The cash inflow of the industry has come to a standstill, while the fixed operating costs remain 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,” Kumar Rajagopalan, CEO, Retailers Association of India, said in a statement.