Auto retailers’ lobby writes to FM, RBI governor to request loan moratorium – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/auto/auto-news/auto-retailers-lobby-writes-to-fm-rbi-governor-to-request-loan-moratorium/articleshow/82604831.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23Synopsis

Retailers, or dealers, make an upfront payment to automakers while purchasing vehicles and this is usually funded through loans with a payment cycle of 30-90 days. Localised lockdowns across the country means that the inventory hasn’t been sold within the expected period, dealers argue, impacting their ability to make good on their payments to lenders.

lobby of automobile retailers has written to the finance minister and the Reserve Bank of India Governor seeking a loan moratorium and a three-month extension for filing goods and services tax (GST) as localised lockdowns have forced three-quarters of the showrooms across the country to close shutters temporarily.

Retailers, or dealers, make an upfront payment to automakers while purchasing vehicles and this is usually funded through loans with a payment cycle of 30-90 days. Localised lockdowns across the country means that the inventory hasn’t been sold within the expected period, dealers argue, impacting their ability to make good on their payments to lenders.

“Since dealers have not been able to do business during the lockdown, this period should be considered as null and void when considering repayment to the banks,” Federation of Automobile Dealers’ Associations (FADA) said in its letter to the central bank’s governor. ET has viewed a copy of this letter.

Similarly, the lobby group requested a three-month extension on filing of GST returns from Finance Minister Nirmala Sitharaman.

Automobile retail was down 28% in April compared to March, vehicle registration data show. Retail during May is expected to dip to just a fifth of what it was in May 2019 when the business environment was normal, Vinkesh Gulati, president of FADA told ET in an earlier interaction.

Dealers said that if the situation persisted beyond May, many would find themselves in trouble with a shortage of working capital as fixed costs like rent and salaries continue.

“There has been no help either from the government or OEMs as of now the way they came forward during the last wave of covid last year,” Gulati said in a letter to FADA members. OEM means original equipment manufacturer, automakers in this case.

FADA also asked the finance minister to allow employer’s contribution to provident fund (PF) and employees’ state insurance (ESI) scheme to be reduced like last year to put more money in the hands of employees

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