Graphic arts and packaging industry in India looking towards government for immediate relief and revival from COVID-19 crisis

The 13 associations were AIDC Technologies Association of India,  Delhi; AIFMP, Delhi; All India Printing Ink Manufacturers’ Association (AIPIMA), Maharashtra; Association of Label Printers and Suppliers (ALPS), Delhi; Authentication Solution Providers’ Association (ASPA), Delhi; Federation of Corrugated Box Manufacturers (FCBM), Maharashtra; Federation of Paper Traders’ Association (FPTA), Maharashtra; Indian Flexible Packaging & Folding Carton Manufacturers Association (IFCA), Maharashtra; IPAMA, Delhi; The Institute of Packaging Machinery Manufacturers of India (IPMMI), Maharashtra; Label Manufacturers Association of India (LMAI), Mumbai; The Regional Institute of Printing Technology Alumni Association (RIPTAA), West Bengal; and Screen Printers’ Association of India (SPAI), Maharashtra.

Taking in view all aspects of the COVID-19 situation and the post-lockdown impact, it was decided by the representatives of the associations that the following recommendations should be conveyed to the Government of India through the concerned Ministries including PMO, which are absolutely necessary as immediate relief for reviving the industry.

Recommendations

Inclusion of graphic arts and packaging industry in essential sector

Graphic arts & packaging sections, which cover whole gamut of printing, packaging, corrugation, label, screen printing, inks & consumables, authentic solutions, etc., should be included in the essential sector.

Extension of financial year and advance tax

It is proposed to extend the financial year up to July 31, 2020 instead of March 31, 2020. Even after the normalisation of the prevailing conditions, it will take considerable time for the industry to come back to the normal position. Similarly, advance income tax payments of June, September and December should be shifted to March 2021 as installments without interest or penalty since firms cannot estimate the profits for the year 2020-21.

Liability of workforce on entrepreneurs

Practically it is not possible for entrepreneurs to take overall responsibility of workers from COVID-19 infection, as movement of material and staff are common in the production of any product.

Quarantine facilities

Government should provide quarantine facilities for migrant workers, in coordination with MSME units, for 14 days before working in factories.

Wages, salary, bonus, ESI and PF

Considering the advice of the Government of India and the State Governments, the Members of the Associations/Federations have already paid the salary of March 2020 to the workers. However, it is not possible for the entrepreneurs to bear the burden of wages for the coming months, particularly by the MSME units, due to severe financial constraints. In this context, the following submissions should be considered for implementation.

• ESI benefit of medical leave to workers: As per provisions of ESIC Act, any person insured with ESIC, is entitled to get salary against medical leave, based on the Medical Certificate issued by a medical practitioner, duly registered with ESIC. In the scenario of lockdown due to COVID-19, the absence of the employees from the workplace should be treated as medical leave and 100 percent wages and salaries for the lockdown period should be paid by ESIC which has enough funds.
• ESI, PF and bonus: The Government should grant exemption to the Industry from making payment/contribution towards ESI, EPF and Bonus for the entire lockdown period, whether complete or partial. The Government should also bear EPF contribution at least for a period of 9 months, without limitation of Rs 15,000 ceiling, in respect of all eligible units, irrespective of number of people employed or the turnover. All eligible MSME units should also be permitted to pay arrears of ESIC, EPF contribution in 9 monthly installments and ensure that all legal actions contemplated or being taken are dropped/withdrawn against the concerned defaulting MSME units, if any.
• Salary & wage reduction: Allow salary and rages to be reduced by 30 percent, for all other employees who are not covered under ESIC, in line with the government’s announcement of a pay cut of 30 percent, for the entire lockdown period.
• Extended shifts: Shifts of 12 hours should be permitted/allowed where partial relaxation/exemption has been given to industrial units for operation, as these units cannot operate with full workforce due to social distancing.
• Shortage of workforce: Most of the MSME units employ migrant labourers from different areas within the state or from other states. Due to lockdown, most of the workforces have already left for their home states. Once the lockdown is lifted partially or completely, the MSME units will again face a problem of shortage of workforce. The government should devise a special package for the workforce/labour to return to the workplace.

Electricity, water, property tax and other utilities

• Free water & power charges: State ggovernments should advise all DISCOMS and water supply boards to waive of the fixed charges for the lockdown period. Only actual consumption charges should be collected for this period.
• Without any levy of interests: Allow payments up to July 31, 2020 without any levy of interests for electricity/water bills payable for the period March 01, 2020 to June 30, 2020.
• Extension of due dates: State governments should also advise all municipal corporations to extend the due date for payment of property taxes, corporation taxes, etc. till December 31, 2020.
• State pollution control boards to defer compliances: State governments should also advise their respective state pollution control boards to defer compliances under the State Pollution Control Act till December 31, 2020.

Free movement for commercial vehicles

All commercial vehicles should be allowed toll free movement till August 2020.

Cash flow, working capital and interest

• Bank interest: Bank interest levied on the finances which are taken by the industrial units to meet their requirement of working capital and that they make best use of the same for the growth and development of the business. As everything is on hold, therefore, it is requested to give relaxation on the bank interest too.
• Extension of ad hoc working capital: To extend ad hoc working capital – WCTL to the extent of 25-30 percent on the existing working capital limits, by all public and private sector banks, without exception and with interest subvention or @ 6 percent p.a. The same can be repaid in 36×48 months. This will ensure adequate cash flow for restarting and continuity of operations.
• Deferring interest and installments: All banks in public or private sector should be directed to defer the Interest and installments of loans till December 31, 2020 which should be recovered subsequently in 9 installments, over a period of 18 months, at a concessional rate of 6 percent. Interest subvention should be given by the government. Moratorium should also be extended to LCs and bank guarantees which have fallen due in the lockdown period on the same basis. The banks and financial institutions should be directed not to take adverse action against MSME units and relax the conditions related to maintenance of minimum balance against working capital limits obtained to run the businesses for at least 90 days.

Special credit linked capital subsidy scheme and CC/OD

• Filing application: The due dates for filing the application under CLCSS for the financial years 17-18, 18-19 and 19-20 was March 31, 2020. We request that those MSME units who have not been able to file their application by the due date, owing to lockdown etc., be allowed to do so till September 30, 2020.
• Waiving interests: Non-payment of CC or OD interest leads to NPA, it should be liberalized or interests on loans and CC/OD limits should be waived off by 50 percent for next six months.

Compliance under GST, Income Tax, FEMA, etc

• Taxation date extended: The ministry has allowed vide notification no. 35/2020- Central Tax dated April 3, 2020 a date extension till June 30, 2020 for compliance of action under GST. Also vide notification no. 31/2020-Central Tax has allowed NIL interest rate for first 15 days after due date of filing return in Form GSTR-3B and 9 percent thereafter till June 30, 2020.
• Foreign exchange due date extension: COVID-19 has affected all trades globally, all time-bound commitments under Foreign Exchange Management Act (FEMA) such as collections from foreign debtors, export commitments, payment to foreign creditors, etc. which may be falling due between March 15, 2020 to April 30, 2020 should be extended by 90 days from date of it being due.
• Deadline extension: In case some LC opened for import of machines and raw materials, and it could not be honoured due to COVID-19 pandemic, such deadlines should be extended for 90 days or converted into Term Loan.
• Waiving off penalties: All the deadlines relating to the government taxes should be extended up to September 2020 and penalties, if any, should be waved off.
• Extended GST return filing date: Either the bills issued during the lockdown period should be honoured by the purchaser or the government should allow GST inputs on cancellation of these bills. Government should extend GST return filing date for all MSMEs till March 31, 2021 and waive off late filing fees, penalty, etc. The interest for late payments may be charged @ 6 percent. Government should also permit payment of arrears of GST by all MSMEs in instalments, till March 31, 2021. The GSTR-9 and GSTR-9C return filing dates should be extended till September 30, 2020.

The industry believes that the implementation of the recommendations will not only help in the revival of the industry but also bring it on its original track.