The mall sector has been going through one of the most challenging periods in recent times. In the current quarter, rentals of mall operators are expected to decline by 20-25 percent as against earlier estimates due to Omicron-led third wave.
Also, with impact on recovery in Q4FY2022, the rental recovery for FY2022 is expected to be up to 70 percent of pre-Covid levels, as compared to earlier estimates of up to 75 percent recovery, according to a report by ICRA.
The main challenges that the sector faces are to deal with low footfalls and poor sales, particularly whenever a new wave strikes and movement curbs are introduced.
Consequently, the retail malls, a sub-category within the retail, expect the government to restructure GST formalities, extend the moratorium on loans, create a national policy on retail, among others that will benefit the growth of the sector.
Mukesh Kumar, Chief Executive Officer, Infiniti Malls said, “The pandemic has been extremely straining and challenging for the sector. The lockdown and restrictions imposed for brief periods, mandating limitations on retailing hours, movement of people, operational days, entry basis vaccination, etc., have all resulted in retailers and establishment owners incurring heavy losses."
Actually, the festive season did boost sales and growth trajectory and the statistics at the time did indicate that things were slowly pacing back to recovery. The new variant and the surge of cases have again slowed down business. The government ought to bring measures in terms of taxes or policies that facilitate consumption.
Nandini Taneja, Vice President - Leasing, 3Roads Reach Group said on the matter: “Sudden rise of the third wave has affected retailers once again, strongly needing an overall tax burden and simplification of compliances. The budget shall be focused towards stimulating consumption, people need disposable income to help retail grow, public spending can be augmented and creating more jobs."
Consequently, the mall will be eyeing a lot, if possible special provisions for the malls given the sustained losses they faced because of the pandemic-induced lockdowns, from Budget 2022 that will give some certainty of revival to the sector.
Nitin Khanna, CFO of Inorbit Malls said, "For the budget 2022, we would like the government to take a measure of stability in policies and the tax regime for Real estate & Retail. Any increase in GST on clothing, food, and housing creates a direct impact on consumption. A direction for a more predictable GST regime would be welcome. Similarly, many clauses around Input Credit, carry forward and refund of GST needs clarification."
Again, regarding the policies and measures, Rajeev Ranjan, GM - Sales, KW Blue Pearl said, “To help them revive and function properly, the mall sector of India expects a reduction in GST. Also, loan waivers and relaxations in income tax would help the sector too. Helping the sector with digitalization norms and regulations will help in the growth of the country too.”
On similar lines, Deva Jyotula, Head - Korum Mall added, "The retail industry has undergone several challenges owing to lockdowns, and restrictions. In these trying times, we look forward to a friendly budget for the retail sector, with a slew of measures being offered by the government to cushion the impact caused by the pandemic on the sector. We also urge the government to take considerable steps towards restructuring the GST rate, and bring back the GST on various goods such as textile, footwear, to 5 percent from the earlier 12 percent. With the third wave negatively impacting the sector, we request the government to opt for a growth-oriented budget for the sector."
“We are hoping that the government takes the situation under consideration and allocates resources to plan for the revival of the retail sector in the upcoming Union Budget. The allocated resources could essentially help a lot of small retailers who have been the worst affected, as well as others in the industry,” Kumar concluded.