How can local markets, economies be opened up? Top industry leaders explain

Chairman of the TVS Group, Venu Srinivasan, Arvind Ltd’s Executive Director Kulin Lalbhai, Chairman of the Select Group, Arjun Sharma join India Today’s Rahul Kanwal in an exclusive conversation about the Indian economy and its revival. Also part of the conversation is Managing Director and Chief Executive Officer of the Indian Hotels Company Ltd, Puneet Chhatwal, Urban Clap co-founder Varun Khaitan and Director General of the Confederation of Indian Industry (CII) Chandrajit Banerjee.

How bad is the tourism sector? What is the roadmap to ventilate the hospitality sector?

Puneet Chhatwal: Beside aviation, hospitality is one of the worst-hit. There is fear in the minds of consumers about what to expect in the future. I believe we will have a post-corona phase and the post-vaccine phase. The post-vaccine phase will bring us to the new normal.

What will the new normal look like?

Puneet Chhatwal: We will see a major impact in the next 6-12 months. The Boston Consulting Group came up with the ABC of consumerism. Attitude, Behaviour and Consumption. Buying behaviour will see a change. I believe the wedding sector will come back.

What are the concerns of the retail sector?

Kulin Lalbhai: If you split retail into essential and non-essential. The latter is a discretionary spend. In China, two months after the lockdown, business is down by 30-40 per cent. It will take 4-6 months for disposable income to come back and business to bounce back. We are thinking about safe consumption and safe shopping. The industry and government will have to work on that. All types of retail can be made safe.

How long will it take for manufacturing sector to bounce back?

Kulin Lalbhai: It will be challenging for manufacturers to ramp up unless spending returns. We have worked on safe manufacturing. As the domestic demand returns, it will be more viable for manufacturing to resume operations.

What is the road to recovery for the auto sector?

Venu Srinivasan: Road to recovery has to be led by demand. For demand, we have to put it in the hands of the people. Tax cuts will have to be given. America’s deficit, debt-to-GDP ratio are higher than in India. Waste management and recycling is the future we should invest in. If there is no fiscal incentive, I expect the demand to come back in six quarters. If there is no fiscal extraction, I see a contraction in GDP.

What does India Inc require to make a comeback?

Chandrajit Banerjee: India stands tall in how it has dealt with Covid-19. Post-May 3, one needs to see a strong focus on economic activity. You cannot open up lockdown if the supply chain is 95 per cent fine, you can open up if the supply chain is 100 per cent fine. The definition of green zones and red zones need to be defined more clearly.

You need to open up stores. There is no point if only dealers open up. The MHA is issuing great clarifications. We need interpretation, we don’t want exemption raj to come back at the district level. We need a strong, well-drafted fiscal package for self-employed workers and MSMEs. This is the right time to look at FRTM and move out. India’s debt-to GDP-ratio looks good. Companies are looking to enter India.

How do you hope to see footfalls return to malls?

Arjun Sharma: The view of the Shopping Centre Association of India is that shopping centres can best implement social distancing guidelines, it cannot be done in open markets. If any organised place has to open, if you have a proper air filtration system, the inflow of the virus can be blocked. We will not let people walk around without masks and sanitise the place well. As and when the government allows, we would open to a 30 per cent capacity and then take it from there.

How will a post-Covid mall look like?

Arjun Sharma: We will not be celebrating too many festivals. More essential products will be available. In the first few weeks, we will open 20-25 per cent of the capacity, retailers with domestic manufacturing will be able to get a running start as compared to those dependent on imports.

How are you hoping to tide over the Covid-19 crisis?

Varun Khaitan: The government’s strategy to open up the lockdown in phases is the right decision. As a young company, this unprecedented situation has put a lot of pressure on us. We are reducing costs without layoffs and we look forward to the future. The MHA has allowed some parts of our business to open up like repairs.

How many start-ups will survive?

Varun Khaitan: Start-ups in the early phase of their journey will face the heat. Those in the mature phase will do fine. The government should support e-commerce. We need strict guidelines as the lockdown opens up. E-commerce reduces contact, enables services and contactless services and payments can also be ensured. Traditional industries should be encouraged to partner with e-commerce, provided that precautionary measures are followed.

ILO has projected that 50 per cent of the world’s jobs are in jeopardy. How are you dealing with job losses?

Venu Srinivasan: Large groups like us have not resorted to layoffs, like in tier-1. In tier-2, there are thousands of job losses. It is not about the economy doing well, it is about a hundred million people losing their jobs. It is about protecting livelihood.

Will Covid-19 accelerate automation in automobile sector?

Venu Srinivasan: There may a short-term impetus, next six months or a year. Covid-19 will go away. A long-term trend is not automation, it will be work from home, lesser use of airlines. In my opinion, we are a year away.

Hospitality sector accounts for 9 per cent of India’s GDP, what are you doing to counter job losses?

Puneet Chhatwal: We are in this crisis which is also a big opportunity. We have demonstrated a huge amount of solidarity in the last five weeks. Going forward, it is important to not consider just an institution to help get us out of this crisis. We need the right framework to minimise

We get a three-month moratorium, maybe we get a twelve-month moratorium. Duties, excise taxes have to be paid without the businesses operating. Electricity and other utilities can be exempted by state governments. About 12 per cent employment is directly or indirectly related to hospitality.

What about employment support in the garment sector?

Kulin Lalbhai: In garments retail, blue-collar retail is very labour intensive. The short-term focus has to be on survival and then on recovery. Liquidity is most important for survival, companies will need moratoriums. It will allow more companies to survive. For very job-intensive sectors, we are talking about 70 million people involved. It is critical that upfront liquidity and employment support is provided.

How can India Inc protect jobs?

Chandrajit Banerjee: Jobs is a huge issue at this time. Governments worldwide are supporting jobs to cut back on job losses. Larger companies will be able to make payments if the government supports this. Additional working capital should be provided. RBI backstop facility, three-month wage bill and government support are crucial.

We have to do away with GST. There is no production. It has to be done away in some time. We can see production and demand coming in. The government’s role will be as important, the industry will do its bit. Today one of the biggest issues we are seeing, the lack of available workers for a restart.

What is being done to reduce costs and make business optimal?

Venu Srinivasan: If you don’t have sales, you don’t have GST. We can’t put money in the hands of the consumers.

What can be done to minimise job losses in the mall sector?

Arjun Sharma: The government is aware of our problems as a sector. In Bangladesh, the government has already given a bailout and low-interest loan packages. If smaller countries can do it, why can’t we? The industry, the Centre and states have to work together.

The problem is not with the large companies. Our problem is with the MSME sector. If we don’t find a solution to this problem within the next 30 days, there will be social unrest. I am confident the RBI is aware of it.

How can operational costs be cut in the mall sector?

Kulin Lalbhai: The garment sector in India is pivoting to create PPEs. We could supply to the world. In some sectors, the business model will have to be pivoted.

How do you see e-commerce?

Kulin Lalbhai: The future of the world is omnichannel. The older model is outdated. As the industry evolves, omnichannel commerce is the way to survive in the post-COVID world. I am convinced that safe shopping is the best way forward.

In the start-up sector, how are you grappling with job losses?

Varun Khaitan: Making the business more efficient. We are doing innovative things to relieve customers of any concerns they might have.

We, at Urban Clap, have taken some very important steps to ensure the safety of our customers. Mandatory use of protective equipment, contactless services and contactless payment along with daily temperature checks are being done for this purpose.

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