FPTA bats for relief package, tax waivers for traders

By 30 Dec 2020

Soon after the announcement of the 21-day lockdown by prime minister Narendra Modi, the Federation of Paper Traders' Associations of India (FPTA) wrote a letter to finance minister Nirmala Sitharaman highlighting 12 proposals to bring instant relief to the traders

The apex trade body said it is not happy with the government's response so far

In its letter to Sitharaman, FPTA requested various waivers, tax reliefs, stimulus packages and many other key benefits for paper traders to overcome the shock caused by the lockdown. However, the apex trade body, which represents 35 paper traders associations located across India, is not happy with the response so far, with the government turning a blind eye to many of the queries raised by the traders.

"Our trade and businesses were already struggling to survive the economic slowdown during the fiscal year. Recent fresh cases of Covid-19 raise fears of universal epidemic, and have further reduced the chance of survival for our business community and especially small and medium traders in the short to mid-term. Also, its worrying consequences on human life, it will definitely slowdown our economy and result of the same is obviously visible in trade and business. We are also amongst the most affected economies due to the coronavirus pandemic. Necessity of goods is reducing day by day as the number of affected cases are increasing," the letter stated.

"Due to adverse impact on the economy, cash flow of trade and business is adversely affected. Therefore, to sustain the trade, immediate corrective measures must be taken by both the state as well as central government in such exceptional situations," it added.

The short term supportive measure advised by FPTA to overcome the Covid-19 shock consists of 12 proposals, which according to the trade body, would allay trade fears and boost confidence of the business community. However, according to Hiren J Karia, secretary of FPTA and partner of Jay Raj Fine Paper, the trade body is yet to receive a positive response from the finance minister.
Meanwhile, in an interaction with PrintWeek, BR Rao, convenor - industry affairs, FPTA, came down heavily on the inaction of the government. "Government collects GST and income tax from traders, but does not give any support or financial package to traders. This attitude of the government needs change and proper importance must be given to traders for a strong Indian economy," he argued.

Hiren J Karia, secretary of FPTA and partner of Jay Raj Fine Paper

Though RBI permitted all Indian banks and financial institutions to offer its customers up to three months moratorium on their EMI payments falling due between 1 March 2020 to 31 May 2020, banks have told its customers that interest will continue to accrue over the moratorium period and it will increase the cost.

"This is not helping us in any way," Karia told PrintWeek. "We have not received any reply to our queries to the finance minister. Although RBI has increased liquidity and introduced a moratorium on EMIs, it's not going to help because banks are charging interest for the months not paid."

He said the traders are expecting interest waivers and more help from the government. "It is going to be a big problem for the traders, especially the small and medium enterprises," said Karia.

Rao, however, said, "As a trader, we want normal conditions to prevail at the earliest. Not only the traders to function but also total normalcy of movement of humans and goods and transport be done at the earliest. If the government is unable to do so, they have to provide financial packages to traders irrespective of their size, so that they can meet their fixed expenses such as rent, wages, electricity, interest on funds invested, and loss of profits due to closure of markets."

FPTA is also a member of the Confederation of All India Traders (CAIT). Karia said that CAIT along with FPTA had requested an appointment with the finance minister to assess the situation and take necessary steps to overcome the hurdles once the lockdown period ends.

Recently, CAIT also wrote to Sitharaman seeking a relief package for traders, including waiver on loan interest for lockdown period. It stressed the need for a strong stimulus package for small businesses in the country in view of the packages announced for other sectors of the economy.

In the letter, CAIT National Secretary General Praveen Khandelwal also sought a cap on the residential and commercial rents for the lockdown period.

“Residential and commercial rents be capped at between 10-25 per cent during this period, to allow landlords to see through such period and yet allow individuals and businesses to see through the period of no revenues or low salaries.”

Further, the traders’ body has also sought the government permission to cap the salary of the workers in the segment.

"Even if the lockdown is over, recovery will be delayed by at least 60 days and very few clients will be ready to pay interest. Banks must stop charging interest and the government should waive the interest considering the dire situations the traders are in right now," said Karia.  

Although the government ensured there would be no shortage of raw materials and packaging materials of essential commodities, Karia said that's not the case in reality. Many packaging printers have approached the traders for packaging materials. But the lack of transportation and manpower has made it difficult for both sides to trade efficiently.

"There are very few workers and many have gone to their native places. Even if we manage to open the warehouse, the cops do not allow," Karia said. At times, he claimed, cops also manhandle those who try to open the warehouse, despite the government nod to exempt packaging companies from the lockdown. "There is a coordination mismatch between the police and BMC," Karia reasoned.

According to India Brand Equity Foundation (IBEF), organised manufacturing is the biggest private sector employer in India. Overall, more than 30 million people are employed by the sector (organised and unorganised) and will become the engine of growth as it tries to incorporate the huge available workforce in India most of which is semi-skilled. 

With the lack of transportation and manpower, ports are facing congestion. The consignments are not being able to be moved from the port due to the nationwide lockdown and scarcity of labourers, who have been advised to remain home and practice social distancing.

Karia said traders who are ready to take orders are facing transportation issues. Many traders are requesting their customers to send vehicles to the warehouse in order to take the deliveries, instead of delivering the goods to the customer's place, thanks to the lack of clarity on transportation directive by the police and government agencies.

"Police are not allowing the packaging traders to transport the goods. Although there is a notification, the process is not clear. There is no clarity on how and from where to take the permission," remarked Karia.

On the economic front, businesses are still suffering. Karia said there's no progressive solution from the government right now, although it could change once the lockdown ends on April 14. Majority of the people, including traders and labourers have been stuck at home owing to the nationwide lockdown.

BR Rao, convenor - industry affairs, FPTA

"We would be able to look into the matter more clearly once the lockdown comes to an end, and employees start coming to the office. That's when we would be able to identify issues collectively and put forward our suggestions to the government. We can then see whether they are helping or not," Karia suggested. "We need to identify the key issues and bottlenecks. As of now, we don't know how to overcome the present situation owing to the chaos. I can say that a lot of questions have been left unanswered by the government."

Traders, especially many small and medium enterprises have been hit hard due to the lockdown. Many among them have set up offices in small rented spaces. Karia said that the government must waive their rents till the lockdown period and this to be communicated to the respective landlords as well.

Meanwhile, Rao suggested some measures that could relax the current situation: "The government should waive interest on business loans taken from banks for the lockdown period plus one month extra for normal conditions to prevail; state governments should not collect electricity bills for the lockdown period; and reimbursement of salaries paid during the lockdown period. If these are addressed, I think it will be a big relief to traders."

Karia also said that he has "never seen such a mass scale economic activity all over the world come to a standstill". "It's a very serious situation."

He observed that India will go through a tough period in terms of development and the GDP would probably come down to 1.5% to 2%. However, Karia said a staggered lockdown model could also help the traders get back to their feet, because there would be some form of transaction happening.

He said, right now there is neither collection nor payment. And if the lockdown is extended, paying the employees could become a challenge. Karia said that many companies are not being able to pay its employees. He suggested normalcy should be back in order to address this issue.

He also noted that most of the traders employ migrant labourers, majorly from Uttar Pradesh and Bihar. After the lockdown, many have left for their native place and some have been left behind. Karia, however, said he has paid his employees in Bhiwandi and Mankhurd, and they are able to source food grains from the local kiranas. But, he cautioned that if the current lockdown period gets extended, he would have to risk paying employees from his own pocket.

Karia suggested that the government push for a consumption-driven policy in order help the economy grow. "Various government waivers, stimulus packages for the traders would help increase the rate of consumption and spending activity of the people," he added.

Factories that should open after lockdown

Harish Damodaran and Nushaiba Iqbal wrote in The Indian Express categorically explaining which factories should be open, albeit in phases, soon after the lockdown. They proposed that rather than insisting on "essential goods only", the key lies in which factories can reinforce social distancing.

As 95% factories in most industrialised states remained shut, Damodaran and Iqbal highlights some points through which resumption of manufacturing activity can be achieved without affecting the social distancing conditions. Excerpts from the article in The Indian Express dated 7 April 2020:

  • According to the latest numbers published by National Sample Survey Office's Annual Survey of Industries (ASI) in 2017-18, there were roughly two lakh operational factories across India (all organised manufacturing establishments with power connection that employ at least 10 workers, and those engaging 20 and more without the aid of power). Since these are registered units under the Factories Act, 1948, they can technically be monitored and, hence, subjected to social distancing rules.
  • The ASI figures also show that 86.15% of the registered manufacturing sector's output of Rs 80.72 lakh crore and 72.41% of its 1.56 crore employees in 2017-18 came from the corporate sector – both non-government and government companies – and only the balance were from individual proprietorship and partnership firms. The former set of units would, again, be more amenable to regulation and enforcement of social distancing.
  • If social distancing can be rigorously implemented in organised manufacturing, there would be no need to insist that such activity should be restricted only to the production of "essential goods". Other major employers, who may also not fully qualify as supplying so-called essential goods, include basic metals, other non-metallic mineral products, motor vehicles and trailers, machinery, chemicals, plastic and rubber products, fabricated metal products  and electric equipment.
  • A signalling of intention now to allow relatively big manufacturing units to reopen after April 14, with strict enforcement of social distancing conditions, would give some lead time for re-mobilisation of labour and logistical resources. Factories may then be able to start producing ­– even if in a small way.





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