The exponential growth of Coronavirus across the world and its detrimental effect on the world economy is evident and profound. Policymakers, apart from fighting this disease, are looking for ways to mitigate its economic impact. The conundrum, however, is the payoff of containing this disease. At the cost of slowing down the economic activities, we need to adhere to social distancing and reduced mobility, which have emerged as the best way for its containment.
The Indian government has been proactive in the fight against COVID-19. On the economic front, it has announced a slew of measures to reduce the shock waves including a package of Rs 1.70 lakh crores for farmers, women, and poor sections of society.
The Confederation of Indian Industry (CII) is also working relentlessly to assist the government, industry, and society to tide over this pandemic and keep socio-economic conditions optimal under these circumstances. CII has formed a COVID-19 Forum to work out sectoral strategies and recommendations aimed at minimising the impact of the outbreak in the severely affected sectors.
The Micro, Small and Medium Enterprises (MSME) sector, core to India’s industrial structure, has been among the worst-hit sectors. A critical sector, it needs the utmost attention. CII, with a large membership base from the MSME sector, has been assessing the impact of COVID-19 and has suggested measures to reduce the impact. The COVID-19 forum recently announced setting up of a CII COVID Rehabilitation and Relief Fund (CRR) to aid the ailing MSME sector. The CII National MSME Council is in touch with the MSME members, and constant deliberations are yielding some possible solutions for the sector’s recovery.
CII has identified key areas that are disrupting the MSME sector viz. disruptions in cash flows, wage bills and payments, and inventory management, among others. It has drafted recommendations in two key areas which are, cash flow and working capital, and welfare measure, that could safeguard the sector.
Cash Flow and Working Capital
Coronavirus has halted the production cycle, disrupted the supply chain, and impacted inventories. This, in turn, has hurt the cash flow and working capital of the MSME sector. In such a scenario, CII has recommended an additional ad-hoc sanction of the working capital to the tune of 25% of the current sanctioned limit. CII has urged the government to defer EMIs, installments, and term liabilities without affecting their credit rating and any adverse action on them resulting from the delays.
It has suggested to set up a special MSME Factor Fund for faster realization of bills, creation of a corpus, and extension of NPA norms to 180 days from current 90 days in genuine cases, among many other provisions to restore the cash flow across the MSME sector. To ease the liquidity crunch, banks could extend the credit limit by 20% at branch level, and may also allow an extension of 25% of the sanctioned limits on SOS basis.
Additionally, CII has prescribed faster payment of dues by the larger companies, the public sector, and Government Departments, and to have a monitoring system at place to check the delays.
The MSME sector is the second-largest employer in India, besides agriculture. Therefore, CII believes that the government should intervene to provide much-needed relaxation to both the workers and the sector.
Creation of a corpus for paying wages during the compulsory shutdown, partly compensating the workers through the Employee State Insurance Corporation (ESIC), and supporting laid-off workers till normal operations resume are some of the measures to support the sector.
The government could also ease compliance by giving 90 days extension for the employer’s contribution to the state insurance. An additional approach for the welfare of the workers could be explored by allowing CSR funds to support the payment of wages. The government could also consider a wage subsidy to the extent of 50%, especially in the manufacturing sector for all registered workers, for nine months.
The recovery of the MSME sector depends on the areas of its operation. While the services sector might take a month or two to bounce back, the manufacturing sector might take up to a year, depending on its profitability.
CII believes that a contingency plan divided into three periods viz. till 31 March, 1 April to 31 May, and 1 June to 31 July could give a prudent bandwidth to deal with the MSME scenario. With corrective measures in place and a positive outlook, the impact of Coronavirus-related shutdown on small enterprises could be mitigated.
The role of the Indian corporate sector in disaster relief operations has been growing significantly, be it in collection and distribution of relief material or towards the contribution of reconstruction of social and community assets.
CII is the first Indian industry organization to constitute a Disaster Management Committee as early as May 2001. The CII Foundation (CIIF) was set up in 2011 to provide corporates and other donors a platform to participate in and create large scale, long term development impact.
To facilitate convergence of humanitarian aid and relief efforts for efficient and quick response to natural disasters in any part of the country, CII Foundation developed a Disaster Response Platform www.disasterresponse-ciifoundation.in in 2017-18. The online real time inventory platform maps corporate sector resources ranging from drinking water and food to emergency transportation and communication that can be supplied or donated by companies during disasters.
CII played a key role in disaster relief management after the devastating Kerala floods, and has been instrumental in disaster relief and rehabilitation initiatives covering the Odisha super-cyclone, the Bhuj earthquake, the Uttarakhand floods and landslides, and others. CII has also partnered with the Government and development organisations such as the United Nations Development Programme (UNDP) for the effective execution of disaster risk reduction activities. The Public-Private-People (PPP) Partnership for Natural Disaster Risk Management is the result of various initiatives carried out by CII.
COVID-19 is a natural disaster requiring immense efforts from corporates with interventions and relief measures aimed at people and communities at the bottom of the pyramid and senior citizens impacted due to the lockdown. CII is in constant touch with various Government agencies and local authorities to assess the situation and initiate most urgent relief operations across all states.
To begin with, the relief measures will focus on making available requisite materials towards preventing, protecting and testing. There is a massive requirement of Testing Kits, Personal Protective Equipment (PPE), sanitisers, etc. for medical professionals and the community, and immediate need to provide basic provisions for most affected people due to loss of wages. CII’s ongoing interventions under COVID-19 include engaging with CII members, supporting government health systems, community initiatives and working with Yi, CII’s Young Indians platform.
CII made an appeal to industry members for support for relief and rehabilitation measures on 25 March 2020 and created a system to receive in-kind contributions in different geographies.
To assist with capacity building of healthcare workers and volunteers, initiatives will be rolled out in multiple districts where CII skilling initiatives are on-going. This will be done through capacity building of Master Trainers, cascading to larger segment of healthcare workers and volunteers for monitoring. In fact, CII along with Sector Skill Council on Healthcare is also developing a standard curriculum for training.
CII’s community initiatives include identified interventions for immediate relief requirements – protective, preventive materials for front line workers and community; providing basic provisions to daily wage earners and mapping public & private buildings to convert them to shelters for the homeless. Proposed activities among farm laborers and daily wage earners in Punjab, Haryana and Jammu & Kashmir include distribution of ration kits and distribution of hygiene kits as well as awareness campaign through Audio Van and IEC material.
Young Indians (Yi) is an integral part of CII, formed in 2002 as a PAN India platform for young Indians. CII along with Yi is building a pool of resources and volunteers for helping elders in society as people above 60 are most vulnerable. It is also workingto help delivery of food items to economically weaker sections with ration to be made available through the efforts of CII Foundation and to augment efforts of already stretched health workers.
Keeping in view of the magnitude the outbreak of the virus has caused, CII expects a long-term engagement in all the States with regards to relief and rehabilitation. This would require tremendous support and generosity from all.
Financial contributions can be made by by Cheque / Money transfer in favour of ‘CII Foundation’ as per the following bank details:
Organization Name: CII Foundation
Project: COVID -19 Relief and Rehab Initiative
Bank Name: HDFC Bank
Branch Name: Kasturba Gandhi Marg, New Delhi – 110001
Account No: 50100232980680
RTGS/NEFT IFS Code: HDFC0000003
For cash contributions, please drop an email at email@example.com with subject line “INR ___ contributed towards COVID-19 Relief and Rehab Initiative” with the donor’s name, mailing address and payment details for the purpose of issuing 80G.
To donate in kind, the following may be contacted:
K Jawaharlal, 9910475074 / firstname.lastname@example.org
Deepak Juneja, 9810145280 / email@example.com
The global healthcare system is under unprecedented stress amid the Coronavirus pandemic. Some expect the world to witness more outbreaks owing to climate change, which creates an environment more hospitable for viruses and bacteria. It is, therefore, inevitable that there will be an immense burden on healthcare resources, leading to an urgency for the development of health-tech tools for efficient delivery of healthcare.
Technological innovations such as Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), big data, and 3D printing are not only paving the way for Industry 4.0 but also bringing about fundamental changes in the healthcare sector. The generation of vast amounts of medical data, coupled with the insights derived through predictive analytics, and mHealth (using mobile devices and other wireless devices) tools and health wearables are rapidly changing the healthcare industry across the globe.
The Indian healthcare sector is considered a key pillar in boosting the growth of the Indian economy. And as the number of mobile internet users in India rises to the expected 800 million by 2023, it offers a tremendous opportunity for the healthcare industry to address the accessibility challenge. Integrating data with healthcare delivery can lead to providing effective healthcare delivery along with generating valuable insights for the business.
The virtualisation of healthcare, which allows for cutting down of infrastructure costs, is made possible by technological breakthroughs. It is erasing boundaries and enabling care through mHealth devices. Technological advancements are also changing the dynamics of the delivery of health services and can minimise the health divide between urban and rural citizens of India.
Smartphone adoption and improved internet connectivity have infact led to the rapid expansion of the mHealth services market in India. Patients now avail of medical services, diagnostics, and preventive care measures using mobile apps that connect patients with doctors at the click of a button. This eventually reduces the time spent in-clinic and money spent in-transit.
There is also increasing usage of technology in point and care diagnostic devices to provide a quick diagnosis. Innovative ideas such as smart bandages, 3D printers for organs, bluetooth enabled inhalers, etc. are some of the prime examples of the application of technology in the medical devices segment.
The National Health Policy (NHP) 2017 has specified goals for the adoption of digital technologies in healthcare namely, interoperable Electronic Health Record (EHR), creation of district-level electronic databases, registries of all diseases of public importance, and linking systems across health providers to envisage a health eco-system as a Federal National Health Information Architecture. There is a plan to have digital health records for all Indian citizens by 2022 which will further facilitate telemedicine and e-health.
The healthcare industry in India is projected to reach $372 billion by 2022. The private players in the healthcare industry are the major drivers of the adoption of technology in healthcare. Hospitals across India are using or planning to use cost-effective cloud-based solutions to modernise their existing IT infrastructure and leveraging the cloud for health management information systems (HMIS) and electronic medical records (EMRs).
CII has been working very closely with the healthcare industry and has been promoting technology in healthcare to make India a health-tech hub.
The integration of technology with healthcare will lead to better delivery of healthcare services across the globe.
As global GDP estimates are being downgraded by multilateral institutions because of coronavirus, India, too, will have to evaluate the impact on its economy, especially with the country’s high dependence on Chinese imports.
China accounted for almost 14% of India’s imports in 2018-19, and an even higher share when one looks at India’s top imports. CII data estimates China accounting for 45% of India’s electronics imports, one-third of machinery imports, and almost two-fifths of organic chemicals.
Given the coronavirus outbreak in China, the immediate requirement is to look for alternate sources of these products. Take essential products such as pharmaceuticals where India sources 65-70% of active pharmaceutical ingredients (APIs) from China. While there are enough stocks available for now, a longer disruption may lead to a shortage.
This needs to be avoided by either expanding domestic capacity, or importing from alternate sources. As both options will be more expensive, some support from GoI in the form of a loan, subsidy or interest rate subvention would be welcome.
China is also a key export market for Indian industry and accounts for 5% of India’s exports. Many firms would suffer revenue losses and MSMEs will need support to diversify to other regions.
Key products exported to China include cotton, ores, organic chemicals and frozen fish. Since many of these products are raw materials or intermediate inputs, this may provide an opportunity to encourage higher value addition within the country. Capital support is required for businesses trying to do so, while marketing support is required for exporting the finished product to new markets.
A government-industry task force should be set up to create a strategy to handle the situation and avoid industry closures, job losses and price increases.
Different strategies may be required to address the challenges in different sectors and a nuanced approach is called for. In a sector such as electronics, where most components are imported, it may be the right time to attract investments so that more components are manufactured locally. The implementation of key industrial parks and logistics hubs must be fast-tracked.
On the macroeconomic front, the implication of the virus outbreak will be visible in the short term as slowdown in growth and hike in prices. At a time when a revival in growth is expected, a recalibration of such expectations may be required. Supply disruptions and price increases may lead to some setback in the next couple of quarters.
However, with government and industry putting together the right strategy for risk mitigation, a revival in the near to medium term is possible. Some benefits may also accrue on account of the likely moderation in the price of crude oil and other commodities, as China demand remains soft.
With a number of factors impacting the demand-supply scenario across sectors, the macroeconomic picture will become difficult to anticipate. Prices of many items may rise due to shortfall in supply from China. RBI will need to look through the shortterm price disruptions while setting monetary policy.
GoI needs to roll back some of the duty increases it had announced in the budget. The intention had been to encourage domestic manufacturing. But with possible price increase, this would only add to the cost of production within the country and is best avoided. In fact, reimbursement of state levies to exporters, as promised by GoI, must be expedited.
As normalcy returns to China, a situation will emerge where Chinese producers will try to liquidate their inventories at a low cost. The government-industry task force must be alive to such developments and advise strategies such as quality standards be imposed on such imports. A comprehensive set of measures for the near to medium term needs to be formulated to combat the impact of the coronavirus.
GoI and RBI must be ready to tweak policies wherever required to help tide over the exigencies created by the virus. Constant monitoring is required for the next few months.
Note: This article was first published on ET, FEB 20, 2020, New Delhi.
- Chandrajit Banerjee
The impact of the Coronavirus, now named COVID-19, is being felt globally as it has started disrupting trade, supply chains, and commodity demand, causing fears of a possible economic slowdown. The International Monetary Fund stated that while it was too early to assess the full impact of the coronavirus epidemic amidst great uncertainties, the virus may damage global growth in 2020. There are significant consequences of the outbreak for the Indian economy across various sectors, given India’s high import dependence on China. At the same time, we must be careful to avoid overreaction and panic, as the outbreak is confined largely to China.
To assess the impact and stress points across sectors, Confederation of Indian Industry (CII) undertook an extensive consultation exercise with its members and affiliated associations and our office in Shanghai conducted a quick survey of Indian companies operating in China. We found that with many Indian companies spread across major Chinese cities and provinces, supply chain disruptions and restrictions on people are strongly impacting Indian companies based in China.
Further, in India, industries and markets across the board are in a difficult position. The sectors most likely to be affected by the outbreak include shipping and aviation, pharmaceuticals, mobiles, electronics and solar power, among others.
Tanking freight rates due to the epidemic have impacted cargo movement service providers in the Indian shipping industry, with dry bulk cargo movement registering a sharp drop since January 2020. Further, realisation per day per vessel has declined by more than 75-80 per cent in dry bulk trade. In addition, cargo is stalled as ships are not being permitted to dock and unload. The government should consider issuing an official advisory so that shipping companies can put up their position as a genuine case of delay in goods delivery with clients.
The Indian aviation sector is likely to lose out on its gross revenue targets as the outbreak has led to cancellations and temporary suspension of flights operating from India to China and Hong Kong. To deal with the potential tourism losses, providing a limited period open skies policy to western bound destinations till October 2020 could encourage more inflows from that direction.
The Indian pharma industry is heavily reliant on imports of bulk drugs such as APIs and intermediates. In FY 2019, India imported around Rs 249 billion worth of bulk drugs, accounting for 40 per cent of domestic production. The outbreak continues to disrupt supplies of pharmaceutical ingredients which has led to shortages and increased prices for generic drugs in India.
Fast and close coordination between various ministries and concerned departments to expedite approvals, active measures by the government to procure key starting materials (KSMs) and APIs, permitting brown API units/firms with limited capacity utilisation to produce APIs which are being imported are some recommendations that could help the sector. Registration certificates already issued for imports may be extended for delayed deliveries. Some factory units which have been shut down could be permitted to restart operations on provision of self-certification for environmental clearances.
The Indian solar components market is dominated by Chinese companies, which supply around 80 per cent of the requirements, including solar cells and modules. Indian developers are faced with shortages of raw materials required for solar panels/cells due to delayed supplies by Chinese vendors. Many upcoming solar projects may be stalled while output may also suffer. An extension of the timelines of projects would provide relief to renewable energy companies. It is also suggested to utilise the green cess to offer incentives for domestic manufacturers of these modules till the crisis tides over.
For the electronics sector, enhanced availability of credit and relaxation in NPA regulations can help avoid enterprises defaulting on their obligations. RBI can play an active role to reduce financial stress by calling on lenders to adopt a sympathetic stance. Additionally, it is suggested that the borrowing limits should not be reduced.
While there is uncertainty about the duration of the current crisis situation, we believe that the disruption can continue for two quarters or so. Meanwhile, it is essential to avoid price rise owing to restrictions in supply of critical goods for consumers. Once shipments are restarted, the government must ensure that all paperwork is conducted at great speed to clear goods at the ports to alleviate stress on enterprises.
The coronavirus crisis is also a chance for India to make progress on its Make in India aspirations and also export for the world. Business conditions must be conducive to position India as a viable competitive alternative to China which Indian industry is fully capable of.
In the medium run, we must ensure that Indian manufacturing can reach close to the price points that Chinese manufacturers provide. Indian industry enjoys the capability inside the factory gate but outside-the-fence factors such as ease of doing business, cost of capital, land availability, and others need to be competitive. Right-pricing of transport and energy will make Indian goods more competitive in global markets.
Note: This article was first published on Business Standard on February 20, 2020.
COVID-19 has been declared as a global pandemic by World Health Organization (WHO) and identified as a ‘Notified Disaster’ by Ministry of Home Affairs. The disease, since its outbreak in the end of 2019 in the wet market of Wuhan, China, has taken the world by storm, spreading at lightning speed.
It has severely disrupted lives and economies across the globe. This has tested public health preparedness to the optimum level even in developed countries who are still struggling to deal with the situation.
In India, the numbers of positive cases have reached an alarming 1965 and the death toll has risen to 50 (as on 2 April 2020). Amidst the looming clouds, let us take a look at some of the best practices being followed by Indian industry to control the situation, keeping the safety of employees intact while ensuring business continuity.
Healthcare Technology companies have issued detailed Health Advisory to employees to help them understand how to prevent and slow down transmission of the COVID 19 virus. The advisories ensure workers are better informed about the COVID-19 virus, the disease it causes and how it spreads. They list out Do’s and Don’t’s for the employees to follow.
Some CII member companies are prioritising the supply of Ethyl Alcohol and ENA (extra neutral alcohol) to the sanitizer industry. Several companies are planning to produce hand sanitizers. Along with these, companies are spreading awareness in communities about COVID 19 and what precautions are to be taken to avoid contracting the disease.
Tech companies have developed a set of actionable roadmaps, toolkits and packaged services to help Learning and Development (L&D) organizations minimize the disruption caused due to the accelerating impact of the crisis. This will also help to jumpstart digital transformation for a sustainable future.
Some member companies are providing employees with 2 months additional pay, flexibility in PF / VPF contributions among others. These measures, coupled with wellness platforms, live interactions and fitness sessions, are keeping employees engaged.
Companies are inviting med-tech entrepreneurs, corporates and innovators to solve the med-tech challenges faced in the COVID-19 crisis. This is a one-of-a kind dynamic grand challenge where the focus is on Ventilators and Personal Protective Equipment (PPE) solutions that are ready to go into manufacturing as soon as possible; simple, easy and quick to deploy on site (healthcare workers can be trained quickly); significantly cost-effective compared to currently available solutions in the market, with high performance; safe and compliant with requisite medical standards and open to making the solution open source format.
Some enterprises are working towards enhancing skill sets of employees through Training Programs digital platforms. They are in communication with employees on a daily basis and supporting them to work efficiently from home during the lockdown period. Many of the tech companies have provided innovative solutions to facilitate remote working, holding meetings, interviews, to ensure business continuity on one hand and safety on the other.
CII member companies have been at the forefront in tackling the humanitarian aspect of the health crisis through contributions to government funds and CII relief and rehabilitation fund. They are actively working to assist distressed segments of society and protect them from the virus.
Fund contributions are proposed to be utilised in making protective equipment for medical personnel, respiratory systems for treating increased cases and testing kits. Training of health workers and the general public are also being given to help them combat the virus.
Providing free food to the poor and needy is yet another measure taken up by industry in this crisis. Hygienically cooked meals are bring handed over to the administrators of districts for distribution to labourers, migrant workers and those who earn daily wages, ensuring that a large number of people are fed during this time.
To help those who depend on daily wages like drivers and auto rickshaw drivers, some car companies have set up crowd funding platforms to ensure safety and welfare of the families of drivers who have been hit by the present situation.
Food product companies are donating packets of food items to people, especially the needy who are caught up in the 21 day lockdown.
This is an unforeseen disaster that humanity is facing and requires all to come together and help each other to get through this crisis
The recent outbreak of the Coronavirus (Covid-9) has caused unprecedented disruptions across the world, both at the national and international levels. It has adversely impacted business operations and economic activity across all sectors, while significantly disrupting global supply chains, thereby endangering expectations of a global recovery in 2020.
While global policymakers try and support international financial markets and the real economy through coordinated policy actions, it is imperative that domestic policymakers also come forward and join in through coordinated policy response. Urgent measures and steps to combat the crisis at the national level is critical as the Covid-19 outbreak is bound to impact growth by curtailing consumption and investments as a result of reduced spending.
While the Reserve Bank of India (RBI) introduced a host of innovative measures in its last monetary policy, the industry strongly feels that more such measures should continue in the face of the crisis as it is necessary to boost sentiment. The Confederation of Indian Industry (CII) feels that though the RBI’s scheduled bi-monthly meeting is due in April, it could announce growth supportive measures even earlier.
CII suggests that a rate cut of at least 50 points before the April meet might positively impact the economy by enhancing liquidity and that the RBI should not be hesitant to cut rates, even by a larger proportion, in line with global central banks, such as the US Federal Reserve and the Bank of England, which have lowered interest rates to bolster markets in the face of the corona crisis.
Sectors such as the Micro, Small and Medium Enterprises (MSME’s) are particularly vulnerable as the spread of the coronavirus have severely hampered their operations along with revenues due to disruptions in global supply chains. Thus, providing additional targeted liquidity support to such sectors may be the need of the hour, beyond the further increase in the quantum of liquidity support to be provided under the Long-Term Repo Operations (LTROs).
The RBI could follow in the footsteps of the European Central Bank, which recently announced several measures, including launching a new round of targeted longer-term refinancing operations (TLTROs) to support bank lending to those affected most by the spread of the coronavirus, specifically for the small and medium-sized enterprises.
The Indian banking sector also stands susceptible to greater risks as uncertainty and fears over the corona crisis mounts further. Therefore, the RBI needs to proactively undertake constructive moves to prevent the build up of stress in the banking sector, apart from continuing to provide support to various sectors and the economy in general. There is also a need to promote and engage in frequent dialogue with the industry and the banking sector to identify challenges and come up with timely interventions.
Given the current scenario, the role of the RBI as the central bank and the supervisor and monetary authority of banks needs to be reconsidered. As the central bank, while the RBI keeps a check and makes decisions regarding the monetary policy, currency, forex reserves, CII has recommended the creation of a separate unit under the aegis of the RBI, which will be responsible for oversight, monitoring and supervision of both private sector and public sector banks of the economy. This move, while according a distinctive role to the RBI as the central bank and the regulator of the banks in India, will also greatly improve the efficacy in the RBI’s performance.
The world is currently passing through a challenging period due to the spread of Covid-19. The safety of people across the world is of paramount importance, while ensuring that the epidemic does not infect more and more with each passing day. For this, Hon Prime Minister has advised citizens to maintain social distancing and the Government has issued notifications on to ensure public safety, including working from home.
In this scenario, CII has taken a proactive position on ensuring that industry adapts to the emerging conditions with minimal impact on businesses, employees and all stakeholders. To help businesses with business continuity, CII interventions extend to multiple areas, including policy advocacy, support services, competitiveness building and information dissemination.
Regarding policy advocacy, CII has been engaged with the Government at the highest levels and has brought out recommendations for the economy, fiscal and monetary policies, and diverse sectors. Representations have been shared with Prime Minister, Finance Minister, Minister of Commerce and Industry, RBI, SEBI, Ministry of Corporate Affairs and other ministries. Some of the sectors covered include tourism, healthcare, aviation, pharmaceuticals, solar energy, IT/ITES and manufacturing sectors. The MSME sector is of particular concern and CII has presented suggestions to address their issues.
CII is working to ensure business continuity by enabling B2B engagements, virtual product launches, company to company connect through virtual conference facilities, and other platforms. A series of webinars is providing knowledge in different areas to industry. I would urge you to take advantage of the digital tools provided by CII at nominal charge to reach out to your supply chains and customers.
To help companies to cut cost and achieve competitiveness, CII Centres of Excellence are working closely with companies in person or through virtual platforms. The training programs provided by the CII Centres of Excellence are continuing through online platforms wherever possible. All Centres are maintaining their schedule of training, learning and assessment, and awards.
CII is reaching out to its members through letters to keep them abreast of the latest ideas in addressing fallout of Covid-19. It is also actively interacting through the media to people in general to reassure them that Indian industry is keeping the needs of people uppermost in priority.
Additionally, CII is in contact with industry members for disseminating information through diverse platforms. The information includes good individual and business habits at the workplace and for personal use, as also advisories. Four daily newsletters are keeping businesses updated – i) compilation of Central and state government and regulatory authority advisories and notifications; ii) compilation of all CII recommendations; iii) collation of best practices by leading corporates as guidelines; and iv) policy measures being taken by other countries to combat the Coronavirus.
The current situation requires resilience and leadership from industry across the world. CII stands ready to support industry in managing the Coronavirus pandemic.
Humankind is fighting a battle unforeseen in its existence. History is marred with massive pandemics, but the scale of devastation of the Coronavirus outbreak is unprecedented owing to the interconnected global market.
In these trying times, the Confederation of Indian Industry (CII) stands firm with the nation, industry, and the government to steer the health and economy of the nation back on track. It has suggested policy redressal measures, both on the fiscal and monetary fronts, to tackle the repercussions of shutdown due to COVID-19.
CII has appealed to corporates to retain employees and particularly safeguard informal workers as they constitute a major part of the workforce. To strengthen the fight against Coronavirus, CII has urged industry to proactively manufacture ventilators, masks, sanitisers, and medical supplies at affordable costs.
CII has also prepared a list of private hospitals and the number of isolation beds in 20 states that the hospitals are ready to provide voluntarily. Private laboratories have come forward to provide mass scale screenings.
On the fiscal front, CII has put forth a proposal to provide a fiscal stimulus of ₹ 2 lakh crores (one per cent of GDP) in the hands of people through Aadhar based Direct Benefit Transfer. The government could also bring some changes in the tax structure such as waiving taxes for the most distressed sectors like MSME, aviation and hospitality, among others. A grace period of 30-60 days could be provided in utility, statutory and GST payments. CII has also recommended allowing companies to give advance CSR funds of the next two years towards Prime Minister’s Relief Fund to aptly fight the pandemic.
CII has requested to allow extension of various due dates such as filing GST returns, refunds, and adjournment of proceedings. Reduction of GST rates on sanitisers, medical equipment, medical drugs would provide much-needed relief to the citizens. CII welcomes announcements made on 24 March by the Finance Minister to extend last date for payment of taxes and reducing interest due on late payments.
On the monetary side, CII has advocated for the reduction of repo rate and cash reserve ratio by 50 basis points. Moratorium on debt repayments and redefinition of NPA recognition is suggested to be examined to provide relief to enterprises.
CII, in its sectoral recommendations, has brought forth issues that could revamp the Indian industry and make it self-sufficient.
The pharmaceutical industry is heavily dependent on imported Active Pharmaceutical Ingredients (APIs) and intermediates primarily from China. Indigenous production of APIs and intermediates could not only reduce the imports but also make us ready for times like such when the global supply chain is disrupted. CII has suggested creating large API parks with fiscal incentives and supportive infrastructure.
The tourism and aviation sector has been heavily hit by the COVID-19 outbreak. CII feels that more than half of the tourism and hospitality sector could become sick with a possible loss of over 2 crore jobs.
Moratorium on working capital loans and interest payments, GST refunds on cancelled events and extension in export obligation under the EPCG scheme would provide succor to the sector.
With flights grounded, the stress on the sector is severe. CII has called for relief on air navigation service charges and rebates on landing, parking and housing charges for 6 months. The government could provide subsidy packages and tax/fee rationalization to avoid distress if the current scenario persists.
Social distancing is the keyword for containing the virus. As people are advised to limit their travel, the e-commerce sector could play a catalytic role in avoiding the disruptions caused in daily lives. CII has recommended the deliveries of the sector to be treated as an essential commodity sector, including the traditional offline logistics services. It has advocated for the manufacturing plants, and food delivery services to be kept open under strict safety and hygiene guidelines and be treated as an essential business exemption.
IT/ITES sector would be core to the functioning of the industry as most of the employees need to work from home. But to meet government, regulatory, and data protection obligations, there is also a need for some employees to work from the office. CII has urged high quality and reliable broadband connectivity and power supply to avoid any disruptions.
The COVID-19 pandemic is a health emergency and is different from the earlier disruptions on the economic front. We need to re-evaluate our policies and strategies to not only combat the pandemic but protect our economy as well. CII is constantly engaging with Government and industry to provide inputs for managing this crisis situation on a real-time basis.
The corona virus outbreak, and the subsequent country-wide lockdown, has deeply impacted the domestic economy with a majority of the firms expecting a significant decline in their topline and bottom-line in the current and previous quarter, demand declining and jobs getting impacted according to a CII CEOs Snap Poll on Impact of COVID-19 Lockdown on Industry. The survey saw a cross-country participation of about 200 CEOs which was conducted electronically.
The survey results indicate that a significant majority of the firms expect revenues to fall more than 10% and profits to decline more than 5% in both, the current quarter (Apr-Jun 2020) as well as the preceding quarter (Jan-Mar 2020). The expectations of this sharp decline in both revenue and profit growth by domestic firms could foretell the significant impact of this outbreak on GDP growth.
Further, most firms (80%) have claimed that their inventory was lying idle at present. However, more than 40% of the firms expect their stocks to last beyond a month once the lockdown ends - indicating the firms’ expectations of a demand slowdown in the post lockdown period.
During this lockdown, a majority of the firms engaging in production of essential products and supply of ancillary goods are facing constrained operations in production and supply of essential goods and services. Firms have revealed that access to manpower and movement of products have emerged as major constraints in essentials trade, be it manufacturing or warehousing & transport or retail sales of these essential commodities. While the Central Government has allowed manufacture, transportation and distribution of essentials, the enforcement at the local level has implemented the lockdown on essential commodities as well as services.
On the jobs front, about 52% of the firms foresee job losses, in their respective sectors, resulting from the Impact of COVID-19 outbreak and the ensuing lockdown. While the proportion of jobs that are expected to be cut are quite staggered, significant proportion of the firms (47%) expect less than 15% job loss while on the other hand 32% of the firms expect to shed about 15 – 30% of jobs, once the lockdown ends.
In view of this adverse industry expectations, “the government could announce a fiscal package for the industry and implement it on fast track mode especially financial support to MSMEs, given that the sudden imposition of the lockdown has significantly impacted industry operations and the uncertainty of a recovery threatens substantial loss of livelihoods going forward”, said Mr Chandrajit Banerjee, Director General, CII.