- Chandrajit Banerjee
The global spread of Covid-19 has brought about an unprecedented halt to activity in all major economies. WTO has forecast global trade volumes to drop sharply by 13-32%, which has not been seen before in the modern era. The situation is so fluid that most of us hesitate to put a number to growth projections for 2020-21.
Companies dependent on foreign trade are especially vulnerable in these times. India’s biggest export markets – the EU and US – have extended lockdowns in place. Already, between April 2019-February 2020 for the period before the lockdown, India’s merchandise exports declined by 1.5% over the same period last year while imports declined by 7.3% to $436.03 billion.
As the world battles Covid-19, we must take care to sustain our export markets and ensure that lockdown does not translate into loss of outward bound goods. As a first step, the government has provided a welcome extension of the foreign trade policy incentives which were to expire on April 1.
As an immediate measure to protect exports, CII has suggested that exports be classified under essential services so that they can operate with free movement of cargo across states. Delays in filing of bills of entry and payment of customs duties should be given a one-time relaxation of three to six months.
A key issue facing exporters is credit access. The extension of the interest subvention scheme available for MSME exporters could be announced immediately. Further, to tide over the current crisis situation, the scheme could be extended to all exporters as well as those manufacturing mainly for exports. For imports related to exports, banks need to prioritise credit documents and provide special cash credit funding.
Most nations are proactively supporting their exporters during these difficult times. For example, China increased export refund facility by 2% recently. Such moves make Indian goods less competitive in global markets and must be compensated through an additional duty drawback of at least 3% for the next six months to avert mass closure of enterprises.
Another challenge for exporters due to the current lockdown measures is delays in clearances of import containers which attract increase in demurrage and container freight station charges. Such charges should be waived to avoid cost escalation, along with relaxation in time for submission of documents. Some facilities, such as exports inspection council which provides certificates of origin, need to continue operations to avoid delays in exports.
Certain ports and airports should be specifically identified for handling exports on priority basis. To ensure that goods reach these exit points, self-certification should be considered as valid for inter-state movement.
Clearly, the current geographic configuration and concentration of global value chains will dramatically reorient due to the pandemic. The sourcing and import disruptions that have occurred as a result of Covid-19 mean that countries will be seeking to diversify their markets and sources of imports. This will also need to be taken up multilaterally.
India stands a good chance to be able to leverage the evolving trend if it makes strong efforts to expand its export basket and reduce domestic logistics and procedural costs. To diversify exports, agricultural products present a good opportunity. The agriculture ministry has identified 21 products which could be prioritised.
Targeting a few countries per product and meeting their specific standards and sanitary and phytosanitary import requirements also needs attention – this can be done through a government industry standards taskforce. Given air travel disruptions, the government could consider instituting special flights with appropriate sanitary and disinfectant provisions to enable exports from the horticulture, floriculture and processed food sectors.
Two, meat, poultry and fisheries sector could see enhanced exports as well. Trade facilitation by simplifying farm registration procedures for greater traceability and making antibiotic testing easier is required. Easy access to cold storage and warehousing facilities in marine or other food parks at concessionary rates would also be helpful, as would greater avenues to enable processing and value addition.
Three, India has been called the ‘world’s pharmacy’ because of the dominance and quality of its generic medicines. Its supply of drugs to fight Covid-19 to the US and Brazil was a welcome move as it strengthened the India brand as a reliable source of pharma products.
The government has announced an incentive programme of Rs 10,000 crore for spurring domestic API production and in the short term, imports of API could also be considered for ramping up manufacturing for domestic use and exports. Alternative sources of APIs such as Japan, Canada, the Netherlands should especially be explored. Indian pharmaceutical and biotech firms could also look at collaboration with global peers seeking to roll out the new Covid-19 vaccine and treatment medications. For both clinical trials and quality manufacturing, India could position itself as the ideal partner.
Over the medium term, global trade governance will emerge as a critical area for the world to work on in order to minimise disruptions and coordinate actions. This can only be done collectively and strengthening the WTO would be the best mechanism to achieve this.
Indian industry remains fully committed to working with the government to navigate these uncertain times and begin the process of realising India’s full potential in trade.
Note: This article was first published in The Times of India on April 13, 2020
The Novel Coronavirus (or COVID-19) pandemic is causing a significant impact on individual lives, businesses, and the economy. The Indian economy was already witnessing a slowdown in the last few quarters and the current pandemic is going to make the recovery even more difficult.
To curb the spread of the pandemic, the Government announced a 21-day national lockdown starting from March 25, 2020. This was a necessary step as it encourages social distancing, which is the only way to break the cycle of infection. Though the supply and distribution of essential products & services are exempted from the lockdown, it is the most vulnerable sections of the society that are bearing the brunt of this.
The Confederation of Indian Industry (CII) invited close to 200 CEOs from different sectors to participate in an electronic survey titled ‘CEOs Snap Poll on Impact of COVID-19 Lockdown on Industry’. The unanimous survey outcome was the pandemic followed by the subsequent lockdown, has significantly impacted the domestic economy and a further decline in the topline & bottom-line for the current & previous quarters is to be expected.
Close to 75 percent of the respondents expect revenues to fall more than 10 percent in Q4, FY20. As far as bottom-line is concerned, close to 67 percent of the respondents expect the bottom-line (or net profit) to decline more than 5 percent. The expectations of the sharp decline in revenue and net profit are indicators of the impact that this outbreak has on the domestic companies and overall GDP growth.
Along with a decline in an economy, comes subsequent loss of employment. In wake of the COVID-19 pandemic, approximately 52 percent of the firms foresee job losses in their respective sectors post lockdown. According to a CII survey, around 46 percent of the respondents believe that the pandemic will have no major impact on the job market and therefore no expectations of job loss. Majority of the firms expect less than 15 percent job loss whereas 32 percent expect job losses to be in the 15~30 percent range. The repercussions on the job market will only be evident once the lockdown ends.
The complete lockdown has brought most businesses to a standstill, wherein their inventory is not going out in the market. More than 80 percent of the firms from the CII survey claimed that their inventory was currently lying idle and 64 percent opine that the inventory will be cleared in less than 30 days. Close to 36 percent of the respondents expect a demand slowdown in the post lockdown period.
Though the Central Government has allowed transportation and distribution of essential services during the lockdown, many issues had to be fixed to ensure smooth inter-state transportation. Most of the firms engaged in the production of essential products and supply of ancillary goods faced issues such as constrained operations in production & supply of those goods, access to manpower, and movement & distribution of products.
Apart from the national lockdown to curb the contagion, the Government announced a relief package of Rs. 1.70 lakh crore to provide a safety net for those hit hardest by the lockdown.
CII suggests that the implementation of the fiscal stimulus package should be done in a fast track mode as the sudden imposition of the lockdown has significantly impacted industry operations and uncertainty of a recovery threatens a substantial loss of livelihoods going forward.
In the wake of the Covid-19 outbreak, that has had far reaching ramifications on the economy, the Confederation of Indian Industry (CII) has submitted its recommendations to the Government. These address many challenges that the economy is currently facing and would help in restarting the economy in a safe, sustainable and calibrated manner.
The outbreak has caused widespread economic damage along with disrupting supply chains, affecting financial markets and liquidity, along with livelihoods. The crisis is said to be worse than the financial crisis of 2008, when India was relatively in a better position compared to the current scenario.
Given that the Indian economy was already undergoing a slowdown in growth, CII’s assessment for the best estimates of GDP growth for the current fiscal under the present situation, is no more than 2%, with a downward bias. Thus, restoring the economy through timely and appropriate interventions is the urgent need of the hour.
CII has recommended a comprehensive economic package for FY 21, where the fiscal support is limited to 2% of GDP. CII’s recommendations on various aspects related to the fiscal package are as follows:
Additional support to lowest strata and informal sector
The adverse impact of the crisis would be specifically severe for the lowest strata, i.e. people at the bottom of the pyramid and the informal economy.
CII suggests an additional package for these sections, that is over and above the INR 1.7 lakh crores provided under the Pradhan Mantri Garib Kalyan Yojana, by way of providing cash transfers amounting to INR 2 lakh crores to JAM account holders.
Support to enterprises through banks
CII is of the view that supporting industry through banks instead of giving direct subsidies may prove to be more beneficial under the circumstances. CII estimates that the economy would need a credit expansion in the range of 14-15 per cent.
CII therefore requests the Reserve Bank of India (RBI) to extend the support to the industry. Interventions could include:
Addressing the liquidity issues that the economy is facing and will continue to face in the future, as a result of the crisis is imperative, to ensure that the banking and financial sectors are not overstressed and are able to maintain capital adequacy and solvency.
It is important to recognize that the economy cannot afford a bank collapse at this point of time and take pre-emptive action. CII has proposed that the Government of India sets apart a fund of INR 30,000 crores. This could be accessed by banks that meet certain criteria and under specified conditions, by way of issuing Tier 1 bonds which will be convertible at the option of the fund. This is expected to provide a buffer to the Indian banking system, by preventing deserving banks from collapsing.
The CII note submitted to the Government also includes suggestions for health, safety and getting back migrant workers with proper messaging to raise their confidence. These can be found in this blog https://www.ciicovid19update.in/blog/cii-recommendations-on-health-safety-and-others-for-restarting-the-economy-in-a-safe-and-sustainable-manner
The entire paper is available here:
CII Recommendations on Health, Safety and Others for Restarting The Economy In a Safe and Sustainable Manner
The rapidly intensifying Covid-19 pandemic has had devastating impacts across the global economy, stalling businesses operations and economic activity. The economic impact of the outbreak has been unprecedented, with the crisis seen as one of the worst ever.
While the Indian economy was very well cushioned during the financial crisis of 2008, largely on account of its sound financial system and strong growth, the current situation is different. As India was already in the middle of a growth slowdown, the Indian economy is particularly hard hit due to the outbreak.
As India went on a 21-day historic lockdown to contain the spread of the virus, the economy faces widespread disruptions, posing perhaps some of the biggest challenges to Indian policymakers. Therefore, the present situation calls for urgent measures from the Government and decisionmakers to set a strong course of action that leads to a safe and sustained revival post lockdown.
In view of the current situation, the Confederation of Indian Industry (CII) has undertaken a massive contact programme with its members, to take stock of the issues faced by them and to assess the overall impact of the pandemic and the consequent lockdown on the economy.
CII has submitted its recommendations to the Government that focus on safeguarding the macro fundamentals of the economy through a comprehensive package that would help in restarting the economy in a safe, sustainable and calibrated manner.
Besides a fiscal package, the recommendations also pertain to critical areas such as health and safety, logistics, migrant workers and coordination.
Health and Safety
CII has recommended that the Government can create a dashboard to monitor curves of various states and cities. The restart calendar across the states and cities along with the progressive ramp up, in terms of the proportion of manpower allowed to get back to work, must be based on the movement of the respective curves on the dashboard.
Secondly, extreme caution must be exercised when facilities re-open, ensuring that social distancing, screening, sanitization norms are fulfilled on a self-certification basis by all firms and shops. Penalties and closures must be in place for all violating units. Adoption of these activities could be monitored by the states.
Further, the Government must ensure the adequate availability of masks, testing and protective gear.
The logistics sector will have a key role to play in the restart of the economy, specifically in terms of seamless transportation of goods and services along with the harvest across India.
Suggested interventions include ensuring no harassment at borders and various check posts through clear and uniform instructions to police personnel; facilitating movement of truck drivers and others willing to come back by making necessary transport arrangements; allowing the opening of dhabas, diesel/petrol stations and repair shops on highways to ensure availability of basic amenities to truck drivers; extension of insurance cover to workers and families by logistic service providers, to the tune of INR 10-15 lakh for 3 months.
CII recommendations focus on two aspects of getting the migrant workers back – the willingness of workers to come back and logistical facilitation for willing workers.
Suggested measures for the first aspect include undertaking an aggressive ‘messaging’ campaign on the preparedness of the Government and the industry for a restart; facilitating tripartite dialogue between the Government, worker associations/unions and industry to address their concerns; announcing a COVID insurance scheme for the workers, with the cost borne partly by the Government and partly by industry.
For the second aspect, CII recommends issuing of e-passes to workers by local authorities ensuring smooth travel to workplaces; special transport for large clusters with safety protocols in place, among others.
Coordination between Centre and States
Effective coordination and speedy implementation between Centre and States is a crucial aspect for restarting the economy.
Setting up of an empowered group of Ministers at the central level and an interdepartmental task force led by the Chief Secretary at the state level is recommended, for planning, reviewing and addressing implementation challenges. These groups can address on-ground challenges daily basis through frequent consultations with industry.
The Centre and the States must work cohesively to ensure complete alignment between notifications/advisories and their interpretation, issued by centre and states. This could be further facilitated by templatising the notifications/advisories.
The Coronavirus pandemic is wreaking havoc with people’s lives and livelihoods across the world. The number of affected people and casualties is close to 600,000 and 27,000 respectively as of 27th March. Entire countries and major cities are in lockdown to contain its further spread.
India’s Government is taking strong action to deal with the global pandemic. India currently is one of the less affected countries with less than 1000 detected cases, and this owes to the leadership and proactive role of the Government. A lockdown has been announced across the country for 21 days and transport services of railways and flights have been suspended. At the same time, movement of essential supplies is being maintained.
Measures for relief and support have been announced by the Government aggregating Rs 1.70 trillion, which will assist vulnerable sections of society such as women, elderly persons and farmers in coping with the crisis. Similarly, the Reserve Bank of India has instituted a range of monetary steps such as slashing interest rates and extending time limits for repayment of loans. These will go a long way towards helping in managing the current economic situation.
For the latest on notifications from Central and state governments, please see https://www.ciicovid19update.in/
CII is engaging with the Covid-19 health emergency on multiple fronts.
CII has brought out the CII Code to guide members on responsible action. Some key tenets are to protect all contract and daily wage jobs, comply with all health and other official advisories and caring and committing to the wellbeing of fellow citizens to be the guiding principle for all actions.
CII is continuously keeping industry abreast of government notifications, policy recommendations and best
practices to enable better adaptation. These are available on https://www.ciicovid19update.in/
CII is channelizing industry work relating to Covid-19 such as ramping up manufacturing of essential items and equipment and coordinating efforts. It is also working with state governments to ensure that supplies of essential and critical items are not held up due to transport and procedural delays.
For focusing industry efforts regarding Coronavirus pandemic, CII has initiated the CII Covid Relief and Rehabilitation Fund which will attract contributions from industry and assist in all relief measures. The CII Relief and Rehabilitation Initiative is working to identify vacant buildings such as schools that can be converted into housing shelters and hospitals. Industry would provide food and essential items in these places.
MSME will be a special focus area apart from ensuring medical supplies, food and emergency kits. A cadre of volunteers is also being created to help in this while skilling for healthcare workers and volunteers is envisaged. [Details here https://www.ciiblog.in/community/cii-covid-19-relief-and-rehab-initiative/]
To carry out the various industry measures during this disaster-like situation, CII has devised a comprehensive structure under the direction of top industry leaders. While the CII Covid Action Task Force drives overall ideation and implementation, other task forces have been set up for information dissemination, relief and rehabilitation, essential services, manufacturing and trade.
These task forces are driving industry interventions in different areas. State level task forces headed by the respective CII state chairpersons are leading efforts across the states.
Industry is committed to ensuring that the impact of Covid remains muted as far as possible and would be engaged over the months to come to support the country through this crisis period and beyond.
To help in this effort or to find out more, contact us at the CII Covid portal https://www.ciicovid19update.in/
For any issues being faced as industry, please contact the CII Covid Helpline https://www.ciicovid19update.in/helpline.html
To contribute to CII Relief and Rehabilitation Fund, see below:
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
Or contact email@example.com
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 firstname.lastname@example.org 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 / email@example.com
Deepak Juneja, 9810145280 / firstname.lastname@example.org
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.