Army canteens to become completely cashless by March 1

In a big step towards realising Prime Minister NarendraModi's dream for a cashless India, country's most profitable and third largestretail chain - defence canteens, are turning fully cashless from March 1 acrossthe country.

"The canteen stores department (CSD) and the unit runcanteens under it have been asked by the services to turn cashless from March 1as they will sell goods only using plastic money," sources told Mailtoday here.

The CSD has almost 1.2 crore direct customers in form ofserving and retired personnel along with their families and had a turnover ofover Rs 13,000 crore last year. In the army, orders were issued by the adjutantgeneral's branch to canteens that they have to turn fully cashless from March 1and the local formations have been asked to spread the message among theserving and retired personnel, the sources said.

The local formations have issued advisories to the retiredpersonnel that they should arrange credit or debit cards by March 1 as thecanteens are turning cashless, the sources said. For military personnel, itseasy to turn cashless as all their personnel get their salaries in their bankaccounts and have already been issued debit cards by their respective bankslong time back, the sources said.

The pensions of the retired soldiers and officers are alsodisbursed through banks and they have also been given the plastic cards.Sources said exemption of paying in cash would be given only in the rarest ofthe rare cases but it would be discouraged for serving personnel.

The CSD has around 3,900 stores across the country fromLadakh in north to Andaman and Nicobar Islands. The CSD stores sell over 5,300products on discounted rates as they are exempted from sales tax imposed by thelocal state governments on the goods sold by them. After the VAT came intobeing, state governments also exempted the CSD from them.

Buying a car from a CSD canteen, costing `10 lakh in a localcity showroom, can help in saving at least `80,000-90,000 due to exemption onpayment of sales tax depending upon the model and make of the vehicle. Lastyear, the profits of the CSD exceeded that of the Future Retail and RelianceRetail as it earned `236 crore while other chains were far behind it in termsof profits.

 The transaction inthe canteens can be done only through using smart cards. The demonetisationdrive had also seen a dip in sales of the CSD as many unit-run canteens did nothave card swiping machines and were transacting only through cash.

The real impact of the drive on the canteens would be seenonly after the sales figures of the nonprofit organisation are released. CSD'soperating margin is one percent and the CSD that it is the lowest or anyretailer in the world