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CORONAVIRUS - The situation in India
1. General Situation
The spread of the coronavirus started relatively late in India, compared with other countries. Today, nearly 11 months since the onset of COVID-19 cases in India followed by the nationwide lockdown there have been recorded 10,963,394 confirmed COVID-19 cases including 156,111 deaths.
The 4 states with the most number of confirmed cases are Maharashtra (2,081,520), Kerala (1,021,432), Karnataka (946,860) & Andhra Pradesh (889,937). As the country has opened up in a phased manner beginning June 2020, certain zones still remain as Containment zones as the case may be. As this report is being compiled, the number of cases in Bangalore are at rise rapidly. The most recent official number of cases in India can be found on the Government of India – Covid19 website which also gives the detailed state wise figures.
The focus has shifted to vaccination combined with normal SOPs for COVID-19 Management.
2. Preventive measures
The national directives for COVID -19 management continue to follow throughout the country. Compulsory mask, minimum 6 feet distance in public places, fine for spitting in public places and frequent sanitization are a must. Companies must ensure their employees continue to work from home as far as possible
India was in a nationwide lockdown (Lockdown 1.0 till Lockdown 4.0) from March 25th until May 31st. The early lockdown decision and strict travel restrictions, social distancing and mobilizing sensitizing programs for preventive measures of the Government have shown slow progression of the virus. Unfortunately the outbreak still didn’t reach its peak while due to mainly economic reasons, the exit strategy started in June.
India began the World’s Largest Vaccination Drive on January 16, 2021. The first group of vaccine recipients included the healthcare and frontline workers. The second group of vaccine recipients were people over 50 years of age and people under 50 years with comorbid conditions. The vaccines being administered in India are Covishield (the local name for the Oxford-AstraZeneca vaccine) manufactured locally by the Serum Institute of India and Covaxin which is the homegrown government-backed vaccine developed by Bharat Biotech. As of February 16, 2020, a total of 8,720,822 people have been vaccinated across the country. The vaccinations will be administered in two doses.
It is interesting to note that India makes 60% of the world’s vaccines and is home to a dozen major manufacturers.
FIT leveraged this evolution and mounted a timely event to position Flanders, Belgium as the Vaccine Logistics Hub and Facilitator. More information on the event Report – Invitation – Programme enclosed.
3. Exit strategy
Government of India is taking all necessary steps to ensure the containment of the spread of the Virus in the country. See the link for latest Guidelines for Containment, Surveillance & Caution by the Ministry of Home Affairs https://static.mygov.in/rest/s3fs-public/mygov_161180745751307401.pdf .
India has established air bubble arrangements with 25 countries. Airlines from both countries under an air bubble arrangement fly between the two jurisdictions carrying passengers from either point. See list of countries here - https://www.civilaviation.gov.in/en/about-air-transport-bubbles
In view of emerging covid-19 situation in United Kingdom, India has extended the restrictions on flights to and from the United Kingdom allowing airlines to operate only 30 weekly flights between the two countries. The guidelines for passengers traveling to and from UK can be viewed here.
For the latest travel advisory by the Indian Ministry of Health and Family Welfare, see https://www.mohfw.gov.in/ under travel advisories.
The coronavirus pandemic has had a very severe impact on the economy and small and medium-sized companies across the country facing the brunt of the impact. The hardest-hit due to the ensuing lockdown have been the MSMEs suddenly under tremendous stress from working capital, labour and logistics issues among others. With more than 60 per cent economic activities shut down for the initial 8 weeks, as 1.3 billion people were placed under lockdown for, the fear of infection and health concerns started giving way to the fear of income loss affecting the workforce and the fear of survival overwhelming many businesses.
The lockdown came at a time when India’s economy was already struggling with trade across sectors being impacted by the Travel, Tourism, Hospitality and Entertainment industry is highly disrupted and it will take at least 12-18 months for them to make a reasonable comeback owing to the fear factor and self-restriction by consumers themselves. The Indian economy contracted by a record 23.9 per cent in the April-June quarter of 2020 putting huge pressure on the economy. The cascading effect is still seen in the economy and the economy is slowly limping back.
b. Trade barriers
The website of the Indian Directorate General of Foreign Trade gives an overview of the recent amendments in foreign trade policy, for export (from India) as well as import (into India). https://dgft.gov.in/policies/notifications
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c. Measures for Economic Relaunch
As a follow up of several COVID-19 response economic measures, the Union Budget was presented by Minister for Finance & Corporate Affairs, Mrs. Nirmala Sitharaman, in the Parliament on February 1, 2021. The budget aimed consolidating the measures and to further energize the Indian economy through a combination of short-term, medium-term, and long-term measures.
The notable progressive policy changes are as follows:
- New Companies set up in India which start manufacturing before March 31, 2023 - the applicable Corporate Tax is 15%
- Production Linked Incentive Scheme – on approval basis for specified Industries for the next 5 years - incentive varies between 4-6% of the incremental sales
- Faceless Tax Assessment – at various levels right up to tribunals making it transparent
- New Labour Code: Operational from April 1, 2021, the long pending labour issues have been addressed and all the following have been integrated into one comprehensive code and making it more progressive in approach
Code of wages 2019, Industrial Relations Code 2020, Social Security Code 2020, Occupational Safety, Health & Working Conditions Code 2020
As a recollection, in November 2020, the Government of India announced US$ 36 billion stimulus package to generate job opportunities and provide liquidity support to various sectors such as tourism, aviation, construction and housing.
Numerous foreign companies are setting up their facilities in India on account of various Government initiatives that are aimed to boost the country’s manufacturing sector and increase purchasing power of an average Indian consumer.
d. Economic Outlook
India's economy is projected to grow at 7.3 per cent in 2021, even as it is estimated to contract by 9.6 per cent in 2020 as lockdowns and other efforts to control the Covid-19 pandemic slashed domestic consumption. India's economy in 2021 will be the fastest growing major economy with only China coming in a close second with a 7.2 per cent projected growth rate in calendar year 2021 as per the United Nations Department of Economic & Social Affairs. (Source: Business Standard)
The Highlights of the Economic Survey of India 2020-2021 can be viewed here.
Considering India implemented one of the harshest lockdowns, reviving the growth rate to pre-COVID time will be a long road ahead. The gap created in demand and supply will take a considerable amount of time to return to normalcy as the impact of the pandemic has been disparate for each industry or sector.
Overall business sentiments, however, remain positive with the Indian stock markets bouncing back to being ‘bullish’ in less than a quarter, backed by steady in-flows of FDI’s. SME’s and MSME’s are the worst affected, hard hit by liquidity crunch, and therefore are expected to undergo restructuring and consolidation.
‘Pivot or Perish’ is the new mantra. The pandemic has made businesses re-think their strategy and positioning. More and more companies are adopting lean strategy models. Decision making on expansion, internationalization, tie-ups and collaboration has slowed down considerably and stakeholders and being extremely cautious.
The focus on digitization is now of utmost importance for businesses across sectors irrespective of their size. Stakeholders and business owner now more so realize the value addition of incorporating digital platforms whether to support sales and marketing or to manage internal administrative affairs. Majority of Indian companies, especially the SME and MSME’s are now undergoing the digital transformation which was long overdue.
Due to the global cues of China Exodus, the number of companies from across the globe are exploring India as one of the destinations for relocating their manufacturing base. Indian Government is also pitching to attract both large multinationals and international SME’s via this route.
The recent major investment decision seen in India is the announcement of Tesla – EV giant setting up their R&D and manufacturing set up in Bangalore, India.
Following sectors have evolved and have witnessed significant demand as a result of the pandemic.
Healthcare & Wellness: As people adopt better personal hygiene practices in the post-COVID-19 world, the consumption of immunity-boosting and wellness products is expected to see a rise. At present, products like disinfectants and sanitizers are recording the highest sales – a trend that seems likely to continue and become deeply ingrained in consumer behaviour. Fitness products like fitness tracking gadgets and apps are also seeing a surge in demand. Moreover, as people turn to the online medium, provisions like online medicine delivery and teleconsulting will rise even further in the future.
Digital & Internet Economy: In the Asia Pacific region, India is amongst the top three digital adapters for hardware, along with Japan and China, with the over 560 million and rapidly growing Internet users in the country (about 50% of our population). During the course of the pandemic, people started using digital medium for work, education, entertainment, shopping, and payments. Online platforms for work meetings has seen a massive rise in popularity. Meeting and Video calling Applications have come up with innovative features making it conducive for professionals to work from home. Some of the sectors that have witnessed exponential growth due to Covid are ed-tech, OTT platforms, fintech, remote working tools, e-commerce & delivery based services, and cybersecurity.
Automation: While automation technologies have been around for some time, deployed at various levels like chatbots, automated tele-calling, voice assistants, or the industrialized robotics but In the COVID-19 environment, where contactless interaction has been the top priority, automation technologies have found a much faster adoption rate than ever.
Speciality Chemicals: Increased need for cleansing and sanitation has catapulted the demand for hand sanitizers, disinfectants, and surface cleaners. India’s largest fast-moving consumer goods (FMCG) companies have rolled out a range of home cleaning, disinfectants, and personal hygiene products as they anticipate a surge in demand for such items amid the COVID-19 crisis. Also, the increased demand for the disinfectants, drugs, and medicines due to the pandemic, has given an opportunity to the organizations manufacturing chemicals required for manufacturing these. Hence organizations dealing in chemicals are expected to see a spike in demand owing to increased demand for disinfectants, drugs, and medicines by the customers.
5. Useful links
- The Indian Government's flagship investment promotion and facilitation organization Invest India has a very dynamic website with updates on various parameters on its Business Immunity Platform. More on the same can be viewed on https://www.investindia.gov.in/bip
- Travel advice Belgian Ministry of Foreign Affairs: https://diplomatie.belgium.be/nl/Diensten/Op_reis_in_het_buitenland/reisadviezen/india
- Guidelines for International Arrivals
- State-wise Quarantine Regulations
- Guidelines for passengers traveling to and from UK can be viewed here
- Ministry of Health & Family Welfare, Government of India: https://www.mohfw.gov.in/
- Covid-19 impact on Indian economy: https://www.india-briefing.com/
- Novel Coronavirus Help Desk for EXIM Trade - Indian Customs website for addressing problems with shipments at import/export
- Federation of Indian Export Organization (FIEO) COVID 19 measures taken by Indian agencies.
- Directorate General of Foreign Trade (DGFT) Helpdesk for urgent export/import issues
- Overview of Mega Economic Package - Summary of announcements: Aatma Nirbhar Bharat Abhiyaan
- Stimulate consumer spending and capital expenditure
- Ease export, import process
- Extension of the existing Foreign Trade Policy 2015-20
- Indian Government’s goal of having 30 per cent EVs by 2030
- Centre for Monitoring Indian Economy
- India Brand Equity Foundation
- IMF – World Economic Outlook
6. Dossier Coronavirus
Het coronavirus heeft een wereldwijde impact, niet alleen op de gezondheid maar ook op de economie. Ook uw export kan hiervan gevolgen of zelfs hinder ondervinden.
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In het dossier Coronavirus vindt u een aantal nuttige tips, adviezen en inzichten in de economische impact van de verspreiding van het virus op internationaal ondernemen.
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