Business Continuity plan for Small Businesses in Trade, Service and manufacturing

Federation of All India Vyapar Mandal has made a representation to  Hon’ble Prime Minister, Shri Narendra Modi ji on Business Continuity plan for Small Businesses in Trade, Service and manufacturing amid COvid-19. Text of the Same is as follows:-

Federation of All India Vyapar Mandal

Ref : FAIVM/20-04/PMO/298-301
Date 14th April 2020

Shri Narendra Modi ji
Hon’ble Prime Minister
Government of India
New Delhi

Respected Sir,

Sub.: Business Continuity plan for Small Businesses in Trade, Service and manufacturing.

Our great nation is going through a critical crisis due to the outbreak of COVID-19 However 130 core Indian are very confident that due to various steps taken by the Central and respective State Government, life will become normal again very soon.

It is been projected by various international agencies that economy will take a major dip in post #lockout period. A record number of jobs are expected to be lost worldwide. However for India there is a silver lining that 90% of Jobs have been created by unorganized sector which consists of small and medium businesses which is a traditional, indigenously grown and well knitted which had saved India during 2008 recession and now again poised to play a major role in Economy and will face all challenges which perhaps developed economy may not face due to heavy corporatization and concentration of their businesses in few hands.

As a true warrior of the Country, Traditional retails have served millions of Indian by providing them basis necessity during #lockdown and also contributed a lot by providing free meals etc to needy underprivileged.

However on other part Commercial activities are likely to be severely affected for about 3 months during and after lockdown. Small businesses running on the basis of small income are almost on the verge of collapsing as fixed expenses like salaries,rentals,electricity and utilities charges, Interest on various credit facilities are accruing with the passes of every day on the other hand Income/revenue is Zero.

Under the circumstances if Government appreciate role of Small Businesses as well as their role to strengthen economy of Nation and sustaining the jobs for 90% of workforce in India, following are the few area where Government can handhold its glorious traditional retail and small businesses and in turn Retails and small businesses will strengthen economy of the nation.

Complete Interest Holidays for Three Months

All Small Businesses including Trade,Service and Manufacturing should be given complete Interest holidays for three months viz April, May and June on various Term Loan, Working Capital Facilities or any other credit facilities from Banking system. This will save us unproductive cost incurred during lockdown period and will ensure some liquidity for creating economic cycle.

Moratorium from compliances of various Labour Laws

Salaries and Wages are second largest expenditure for Small Businesses. In present scenario employers may be allowed to re-negotiate their Staff and Labour for their salaries and other perks. By this re negotiation at least we can guarantee continuity of employment to existing manpower. For smooth and litigation free negotiation we request to keep all Labour laws and their compliances in a moratorium for six months staring from April 2020. Being exceptional period this may be allowed and once economy comes back on its trail , normal salaries and wages will be restored.

Suspension of Employee Provident Fund Scheme for one year

In EPF both employers and employee contributes aggregate 24% in equal share in employees provident Fund Account. This money is parked for a long term period and normally withdrawn by employee on superannuation. Looking to ongoing exceptional circumstances it is requested that contribution by employee as well as by employer may be suspended for 12 months and employee will have 12% extra purchasing power in his/her hand which will finally create extra demand in market. In the same way employers will have additional cash equivalent to 12% of wages/salaries which will ease fund flow in the hands of businesses.

Moratorium from compliances of various Direct and In-direct taxed Laws

A lot of burden has been put on Small businesses in the name of Tax compliances. Large and Medium businesses have full setup for compliance management whereas in the case of small businesses proprietor or partners have to take care all compliances and lot of precious business hours and days are lost in compliance management. Being extra ordinary situation small businesses may be granted a six months moratorium in compliances of direct tax and indirect tax related compliances.

Mudra Loan /Loan under CGTMSE to be reserved for existing Small Businesses

Mudra loan were designed to encourage self-employment. However during economic slowdown , extra ordinary phase in economy vis a vis increased risk factor , a fresh entrepreneurship never comes up. It is therefore requested that

A threshold limit may be increased by double

B. It should be exclusively reserved for existing businesses (including Trade, Service and Manufacturing)

In the same way Trading and Services fraternity should be given various Bank credit facilities under Credit Guarantee Fund Scheme for Micro and Small Enterprises. This will help in easing of liquidity in Market.

Fresh funding by way of Working Capital/ Over draft limits

A broken economic cycle needs to be reconstructed once again and this may need fresh investment and infusion of fresh liquidity. Therefore Banks should provide fresh Short term loan on subsidized rate of interest and without securities to be asked by banks for this fresh loan.

Interest subvention scheme for at least six month’s time

To create fresh liquidity as well to extend relief to Bank, Reserve Bank has reduced repo rates by 0.75%. Unfortunately Banks have not passed on benefit of this repo rate cut to borrowers rather used for their own benefit. It is therefore requested that Interest Subvention scheme may be announced by Central Government to give a relief of at least 3% in interest cost. However this may be allowed for six months period which can be reviewed once economy is back on its trail.

All kind of penal provisions, interest on delay compliances to be waived on GST and Income Tax

Small Businesses have been subject to harassment for payment of various penalties and levy of interest. If Government waives interest and penalties on late compliance of GST and money so charged till date is refunded back, many small businesses will survive automatically. Post COVID-19 is going to be exceptional period for businesses where survival of small businesses is at stake. Government should have a lenient view on petty defaults committed by small businesses and should refund all money collected from them as penalty and interest.

Refund and unapproved ITC claim to be expedited to ensure liquidity

Sizeable money of businesses is blocked in unproved Input Tax Credit of GST as GST department is not allowing full credit of GST ITC. A sizeable working capital is blocked and a policy on 100% ITC should be worked out to ease liquidity in the hands of Businesses. In the same way GST refunds to export oriented unit be expedited and should be credited in accounts of tax payers without any hassles.

Rentals for at least three months to be reimbursed by Government on Direct benefit transfer basis

Businesses especially in urban have become so unviable that they are unable to service rentals of their commercial premises where they carry on their businesses. As a special stimulate measure Government must reimburse rentals for at least three months viz April, May and June 2020 i.e. the period when there is no / very low commercial activities .

Financial Year to be extended till 30th June

Financial Year 2019-20 may kindly be extended till 30th June 2020 as on stipulated date of closing of year 31st March 2020 went through under lockdown and all due formalities of year ending could not be carried out on 31st March 2020.

States be advised to levy Electricity charges on actual consumption basis

Central Government should issue its advisory to all States Governments to levy electricity and other charges on actual consumption basis. This will mitigate the hardship, to some extent, being faced by small businesses whose commercial activities have come to halt during #Lockdown period.

All commercial properties may be exempted from paying Property taxes

Commercial properties may be exempted from levy of property tax and other levies of Local bodies.

Benefit of reduction in repo rates to be extended to Small Businesses

Over a years time RBI has reduced repo rate several times but in response Bank’s have not reduced Interest accordingly. Government should frame a policy wherein upon reduction in repo rates by Reserve Bank, lending rates by all Banks are automatically reduced proportionately.

We hope the nation will survive by the losses and damaged caused by COVID-19 under your leadership and with the required handholding of small businesses in Trade, Service and Manufacturing sector, by Government, economic cycle of nation will again accelerate and will become prominent economy of the world.

Thanking you
Kind regards

V K Bansal
National General Secretary
8076435958

Advance copy to
Shri Piyush Goel Ji
Hon’ble Union Commerce and Industry Minister
Government of India
New Delhi

Smt. Nirmala Sitharaman
Hon’ble Union Finance Minister
Government of India
New Delhi

Chief Executive Officer
Niti Aayog
Government of India
New Delhi

Download Text of Demand made by FAIVM on post COVID business scenario