Relax FCRA norms, expand GST sops on COVID-19 imports to prepare for future waves: CII president

T.V. Narendran said the Centre should do whatever it takes to help vaccine producers, including issuing confirmed orders and advance payments, to help inoculate India at a faster pace.

Larger businesses in several COVID-19-affected sectors may make it through the pandemic’s deleterious effects, but smaller companies may not survive as income and job losses pile up and weaken demand, said Tata Steel chief and Confederation of Indian Industry (CII) president T.V. Narendran, seeking urgent measures to pre-empt a meltdown.

“Most families have spent more on medical expenditure than they planned, and many families are impacted by job losses or salary freezes or cuts. So there would be a tendency to postpone expenditure, just to deal with the current situation,” Mr Narendran told The Hindu. He recommended temporary cuts in the Goods and Services Tax (GST) rates for the worst-affected contact-intensive sectors and consumer durables to spur demand.

To be better prepared for future COVID-19 waves, the government must relax the Foreign Contribution Regulation Act (FCRA) norms that are holding up global aid flows and ground level relief efforts of well-meaning NGOs. Critical COVID-19 supplies imported by industry and others during the peaking of the second wave, should also be exempted from GST levies.

In order to ramp up vaccine supplies, the apex industry chamber said the Union government, as the largest buyer, should do ‘whatever it takes’ to help producers, including issuing confirmed orders and advance payments, to help inoculate India at a faster pace.

Time for relief

While CII is pleading for excise duty cuts on fuel products along with a package of other measures to give some respite to households and small businesses, the Tata Steel global boss said a more targeted approach is needed for high-contact sectors like hospitality, retail and aviation which have ‘really struggled’ through the pandemic.

“They are big employment generators, creating both formal and informal jobs. So we need to make sure that some of them get the support they need. The bigger companies will still survive, but it’s a large number of smaller ones who will struggle,” he said.

Although the government has expanded the ₹3 lakh crore emergency credit line guarantee scheme (ECLGS) to several more sectors, including aviation, and extended its validity till September, Mr Narendran said it would be better to extend it till the end of 2021-22 and enhance the corpus.

“We should extend it till March next year, so that people have some more time to recover, because you also don’t know if there’s a COVID three happening in October-November or earlier, so it’s better to provide the support from now till March, and then take a call by March next year, where we are on vaccination and COVID,” he said. “Let’s use it where it can be most helpful,” he underlined.

Gearing up for third wave

The CII chief backed IT industry body Nasscom’s call for easing FCRA norms that govern receipt of overseas donations, till the pandemic subsides, stating that India losing out on global aid flows is ‘not helping anybody’.

“There are many good quality NGOs, who, in turn, work through other NGOs, and therefore, simplifying it (the FCRA regime) would help. A lot of work that is currently getting probably held up by good, well-meaning NGOs… That’s actually not helping anybody,” he pointed out.

“We are losing out. We have very categorically said, and we have very, we have also been recommending that it’s important for the government to ease the approval processes at this point in time,” the CII chief said.

On May 3, the government permitted imports for pandemic relief material donated from abroad for free distribution in the country. However, no exemption has been granted from the FCRA norms that require domestic entities receiving foreign aid to get an approval from the Ministry of Home Affairs.

In early May, Nasscom had written to the PM to temporarily waive the FCRA provisions, including amendments made in 2020 that prohibit approved NGOs from passing on received donations to beneficiaries or smaller unapproved NGOs, ‘given the humanitarian crisis’ in the country.

The GST exemption on imported COVID-19 supplies was extended to entities purchasing material to donate here, on May 31, but the notification didn’t cover imports carried out during the peaking of the second wave over April and May. The CII chief mooted a rethink.

“…Whether it was importing oxygen generators, cylinders or tankers or even supplying oxygen, which the (steel) industry I come from, was doing… I think there was a huge amount of selfless work done by industry in stepping up and doing whatever is required,” he noted.

“If some of this (GST exemption on imported essentials) encourages industry to do more and be better prepared, we should certainly do that. Because the last thing we need is to be underprepared for wave three, I’d rather that we are all prepared and there’s no third wave, and we say ‘Oh, we wasted some money, it doesn’t matter,’ rather than the other way around,” he emphasised.

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