Outsourced business sector needs financial aid amid coronavirus lockdown: FICCI to FM Nirmala Sitharaman

The outsourced business services sector, hit hard by COVID-19 pandemic, is in need of financial assistance in the form of GST cut, PF contribution support, Ficci said in a letter to Finance Minister Nirmala Sitharaman.

This sector, having one crore-strong workforce, includes private security, hygiene and sanitation management, manpower supply and cash logistics business.

Outsourced business services sector, with about Rs 1 lakh crore per annum business, is among the top three Goods and Services Tax contributors that paid approximately Rs 25,000 crore last year. Besides, the sector claims lowest input credit (ITC) amongst all other major verticals.

The sector, comprising of 10,000 plus MSMEs, has requested subsidising 35 per cent of the wages for at least 50 per cent workforce for next three months, and six months for 25 per cent workforce.

For latest updates and live news on coronavirus, click here

This will be critical to supporting members in maintain current employment levels, FICCI Committee on Private Security Industry chairman Rituraj Sinha said in the letter addressed to the Finance Minister.

The industry is estimating a 25 per cent to 50 per cent decline in revenues in coming months and these circumstances will compel job cuts, it said, adding that "a sector with such low margins and high working capital intensity is too frail to support wages of 1 crore workers if our customers reduce service volume, cut service charges and delay payments".

Besides, the industry also requested the Finance Minister to consider providing GST relief as the industry expect a 3-4 months collection delay.

"We do not have resources to ensure GST compliance as per norms under prevailing circumstances," it said, adding given the wafer-thin margins of the sector, working capital credit should be extended at sub-Prime Lending Rate.

Listen | Pandemic Podcast: Food shortage looms large on Karnataka

"Banks may be instructed to not adversely impact our revenues and ensure they maintain Q4 FY20 service revenues for period March to September 2020. This is especially critical as our members are helping extend banking services across Branches, ATMs, Cash movement etc," the industry body said.

It further said similar to the Rs 50 lakh provided to government employees, suitable health insurance cover should be extended to contracted private security guards, hospital cleaning, support services staff, fumigation workers, cash van/ATM crews that continue to operate as essential service workers during the lockdown.

"We have incurred significant costs in providing our workforce with protective equipment such as gloves, masks and also installation of sanitisers across facilities and vehicles. We are also incurring expenses in providing safe transportation and housing facilities. We request such expenses to be allowed as eligible spends under our CSR funds," it said.

The body also requested to extend existing PF assistance scheme for employers with less than 100 employees to all companies or employers in the sector and added that the government should support by contributing employer and employees share of PF contribution for next six months till situation eases.