Impact of Lockdown in India

India’s overall export (merchandise plus services) has declined by 25.42% during the period April-June, 2020 as compared to the corresponding period of previous year. The latest merchandise exports show a recovery, with export decline reducing to (-)12.66% in August,2020. With the gradual opening up of the economy after the nation-wide lockdown, industrial activity has started to normalize. The quick estimate of the Index of Industrial Production (IIP), released by the Ministry of Statistics and Programme Implementation for the month of June, 2020 stands at 107.8 as compared to 53.6 and 89.5 in April, 2020 and May, 2020 respectively.

Government has taken the following key steps to boost exports:

1. The validity of Foreign Trade Policy (2015-20) extended by one year i.e. upto 31-3-2021 and relaxations granted and time lines extended due to COVID-19.
2. Interest Equalization Scheme on pre and post shipment rupee export credit has been extended by one year i.e. upto 31-3-2021.
3.  Line Ministries have notified various sectoral incentive packages, such as Production Linked Incentive Scheme (PLI) by Ministry of Electronics and Information Technology (MeitY) and PLI Scheme by Department of Pharma for Key Starting Materials (KSMs)/ Drug Intermediates and Active Pharmaceutical Ingredients (APIs).
4.  Common Digital Platform for Certificate of Origin has been launched to facilitate trade and increase FTA utilization by exporters.
5. A comprehensive “Agriculture Export Policy” is under implementation to provide an impetus to agricultural exports related to agriculture, horticulture, animal husbandry, fisheries and food processing sectors.
6.  Promoting and diversifying services exports by pursuing specific action plans for the 12 Champion Services Sectors.
7. Promoting districts as export hubs by identifying products with export potential in the District, addressing bottlenecks for exporting these products, supporting local exporters/manufacturers to generate employment in the District.
8. Strengthening eco-system for adoption / implementation of mandatory technical standards for goods, services and skilling.
9. Energising Indian missions abroad towards promoting our Trade, Tourism, Technology and Investment goals.
10. Package announced to support domestic industry, including through various banking and financial sector relief measures, especially for MSMEs, which constitute a major share in exports.

This information was given by the Union Minister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

Export of Medical Items

The prohibition on export of various medical items such as PPE Coveralls, 2/3 Ply masks, Face Shields, Sanitizers (except when exported in containers with dispenser pumps), Hydroxychloroquine API and its formulations, 13 other Pharmaceutical APIs and its formulations and Ventilators has been removed. While export of Diagnostic Kits, N-95/FFP2 masks is currently restricted, their export is allowed subject to a monthly quota.

The prohibition on export of medical items was imposed to ensure domestic availability of these items to fight COVID-19. These have been relaxed based on an assessment, from time to time, of the domestic requirement, production capacity and surplus available for export.

Prior to 20^th March, 2020, the requirement for PPE Coveralls was largely met through imports as there was very limited domestic production suitable for COVID-19 requirements. The export ban on PPE Coveralls was removed when the domestic production of PPE Coveralls subsequently reached 1.5 crore units per month. The availability of Alcohol based Hand Sanitizers was 10 lakh litres per annum. This manufacturing capacity subsequently increased to 38 Lakh litres per day, enabling the prohibition on the export of Alcohol based hand sanitizers (except when exported in containers with dispenser pumps) to be removed.

Ventilators production in country, which was negligible prior to January 2020, was ramped up to enable export of domestically manufactured ventilators today.

This information was given by the Union Minister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

Ban on Chinese Products

The Government regularly reviews the country’s import policy, based on emerging trade and economic factors. Decisions to regulate imports are taken based on the assessment in national and public interest. At present, approximately 550 tariff lines are under the ‘Restricted’ / ‘Prohibited’ category for imports under the Foreign Trade Policy, imports of which are restricted from all countries including China.

To support and expand domestic capacities, Government has also implemented policies to promote the domestic manufacturing through ease of doing business and production linked incentives (PLSs), including in the field of mobile phones and electronics components and bulk drugs and medical devices, in line with the vision of Atmanirbhar Bharat.

The full impact of the promotional measures on the industry will be discernible as the global economy recovers.

This information was given by the Union Minister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

Impact of Corona on Sezs

A comparative statement in respect of merchandise exports from SEZs during the period of April to August, is as under:

 

Merchandise exports (April-August, 2020)	Merchandise exports during the corresponding period of previous year (April – August, 2019)
Rs. 81,481 Crores	Rs. 1,30,129 Crores

 

However, Services exports has shown a growth of 9% during April’2020 to August’ 2020 in comparison to corresponding period of previous year.

 

To facilitate SEZ Developers/Co-developers/Units, following measures were taken during the COVID-19 outbreak:

 

31. The last date of filing of various compliances was extended from 31.03.2020 to 30.06.2020 e.g. Quarterly Progress Report (QPR), SOFTEX form and Annual Performance Reports (APR).
32. Development Commissioners (DCs) were directed to facilitate extension of Letter of Approvals (LoAs) and other compliances scheduled to expire during COVID pandemic, through electronic mode, in a time-bound manner. Further, DCs were directed in cases where it was not possible to grant extension through electronic mode to ensure that the Developer / Co-developer / Units did not face any hardship due to such expiry of validity during this period of disruption, and ad-hoc interim extension / deferment of the expiry date was granted without prejudice till 30.06.2020.

• Along with IT/ITES Units, Non IT/ITES Units in SEZs have also been allowed to take desktop/laptop outside SEZs to work from home. This has enabled exports especially in IT/ITES sector to register a positive growth despite lockdown.

1. Power has been delegated to Development Commissioners for broad-banding
   in case of manufacturing of essential items like masks, sanitizer, gowns and other protective/preventive products/instruments subject to post-facto ratification by the Approval Committee.
2. Directions were issued that there should be no increase in lease rent for the units in Central Government SEZs for the Financial Year 2020-21.
3. Payment of lease rent of first quarter was deferred upto 31st July 2020 for all the units in Central Government SEZs. Further, Development Commissioners were also requested to allow the units to clear the first two quarterly instalments of lease rent in six equal instalments starting from October 1^st, 2020.

• Development Commissioners were also requested to advise developers of State Government/Private SEZs to consider similar relief measures in their zones.
• All DCs have been sensitized to adopt electronic work culture and to extend necessary support to the units, including those involved in manufacturing of drugs, essential items etc, and to follow COVID guidelines.

This information was given by the Union Minister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

Make In India

Recently, Government has taken various steps in addition to ongoing schemes to boost domestic investments in India. These include the National Infrastructure Pipeline, Reduction in Corporate Tax, easing liquidity problems of NBFCs and Banks, various policy measures to boost domestic manufacturing. Government of India has also promoted domestic manufacturing of goods through public procurement orders, Phased Manufacturing Programme (PMP), Schemes for Production Linked Incentives of various Ministries.

Further, with a view to support, facilitate and provide investor friendly ecosystem to investors investing in India, the Union Cabinet on 03rd June, 2020 has approved constitution of Empowered Group of Secretaries (EGoS) for Investment chaired by Cabinet Secretary with CEO, NitiAayog, Secretary, D/o Commerce, Secretary, D/o Revenue, Secretary, D/o Economic Affairs and Secretary DPIIT as Members with following main objective:

1. To bring synergies and ensure timely clearances from different departments and Ministries.
2. To attract increased investments into India and provide investment support and facilitation to global investors.

• To facilitate investments of top investors in a targeted manner and to usher policy stability and consistency in the overall investment environment.

Union Cabinet also approved constitution of Project Development Cells (PDCs) in all concerned Ministries/ Departments to fast-track investments in coordination between the Central Govt. and State Govt. and thereby grows the pipeline of investible projects in India and in turn increases domestic investments and FDI inflow. PDCs have the following main objectives.

1. To create projects with all approvals, land available for allocation and with the complete detailed project reports for adoption/ investments by investors.
2. To identify issues that need to be resolved in order to attract and finalize the investments and put forth these before the Empowered Group.

This information was given by the UnionMinister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

ECGC Limited

ECGC Limited was set up in 1957 in Mumbai under the Companies Act 1956 to provide export credit insurance services to exporters and banks to promote and support exports from India.

The performance details of ECGC for the last three financial years and current year are given below:

(Amount in ₹ Crore)

Financial Year	2017-18	2018-19	2019-20	April-June 2020
Amount of claims paid	1,283.17	1,013.31	408.41 *	202.41
Premium received amount	1 ,240.42	1,247.54	1075.41	170.39

* As the documentation for the year 2019-20 was not available by 31^st March,2020, claims paid are lower.

 

ECGC services/products include export credit insurance policies for exporters, export credit insurance for banks and medium & long term project exports, factoring scheme for MSMEs and Micro & Small Exporter Policies. Additionally, ECGC is the managing agency of the National Export Insurance Account (NEIA) Trust that enables Government of India to support Project exports in the national interest.

The capital infused by the Government of India in the company, against which shares are issued to the Government of India, is utilized to enhance the capital base of the company. The underwriting capacity is derived from the capital base, based on which ECGC generates income from business operations and pays dividend to the Government.

ECGC has signed 48 MoUs with similar overseas institutions, aimed at regular exchange of information and best practices, deliberations/exchange of ideas on export credit insurance issues and identification of areas and projects of mutual interest. Recently, as part of its commitment under an MOU signed with Credit Oman, ECGC has provided consultancy services to the latter for improvement of their systems and products and earned USD 75,000 as consultancy fee.

The Government of India has infused equity capital to the tune of ₹1,410 crore in ECGC over a period of three years from FY 2017-18 to FY 2019-20 to support a higher volume of export credit insurance, including for exports to emerging and challenging markets. The performance of ECGC is monitored through the various indicators of MoU, which is signed between ECGC and Department of Commerce.

This information was given by the Union Minister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

FDI

As compared to previous years, Foreign Direct Investment has increased in the financial year 2018-19. The year-wise increase in FDI inflow can be seen in the following table:

 

S. No.	Financial Year	Total FDI Inflow (in US$  billion)
1.	2015-16	55.56
2.	2016-17	60.22
3.	2017-18	60.97
4.	2018-19 (P)	62.00

 

Note: (P) Figures are provisional. Source: Reserve Bank of India.

This information was given by the UnionMinister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

New Industrial Policies

The Government is in the process of bringing out a strategy paper on boosting industrial growth which will be a roadmap for all businesses in the country. 

Scheme for Affordable Rental Housing Complexes (ARHCs), a sub-scheme under Pradhan MantriAwasYojana – Urabn (PMAY-U), for providing accommodation at affordable rent to urban migrants / poor has been launched on 31.07.2020 after approval of the Union Cabinet. It’soperational guidelines along with implementation framework have been circulated to all States/Union Territories (UTs) for planning and implementation.  A draft Memorandum of Agreement (MoA) has been circulated to all States/UTs to sign with Ministry of Housing and Urban Affairs (MoUHA). Till date 17 States/UTs have signed the MoA with MoHUA to implement the Scheme.

As per the Scheme Guidelines of ARHCs, mapping and identification of beneficiaries is the responsibility of selected Concessionaires/ Entities. Concessionaires/ Entities may tie up with local industries/ manufacturers / service providers / educational / health institutions / market associations / others employing urban migrants / poor to provide accommodation in-block and remit rental by deducting directly from their salary / fees / any kind of remuneration, as feasible. The States / UTs / ULBs / Parastatals will facilitate tie up between Entity and Public / Private bodies for migrants in factories, industries / institutions requiring rental accommodation for ensuring occupation and continued revenue.

Government, inter alia, has taken a number of measures to increaseproductivity and quality including launching of Product Linked Incentive Scheme and Phased Manufacturing Programme for a number of sectors and issuing Quality Control Orders for a number of products. Efforts are on to improve the multi-modal logistic infrastructure in the country. Digitization is also being embraced by industry leading to increase in productivity and quality.

Government, inter alia, is in the process of rationalizing the existing central labour laws into 4 Labour Codes i.e. the Code on Wages; the Code on Industrial Relations, the Code on Occupational Safety, Health & Working Conditions & the Code on Social Security by simplifying, amalgamating and rationalizing the relevant provisions of the existing Central Labour Laws. Code on Wages has been approved and notified.

This information was given by the UnionMinister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

Ease of Doing Business

The Department for Promotion of Industry and Internal Trade (DPIIT) in coordination with Governments of States and Union Territories (UTs), is working on improving business regulatory environment in States and UTs. The exercise involves identifying reforms which bring Ease of Doing Business (EoDB), in consultation with the States and UTs. Once identified, these reforms are compiled into an Action Plan and shared with States and UTs for its implementation in a time bound manner. Achievements made by the States and UTs are updated by them on the EODB portal(https://eodb.gov.in). Assessment of States and UTs on the basis of implementation of Action Plan is done by DPIIT.

DPIIT has, so far, released four editions of its assessment under the State Reforms Action Plan. The first assessment was released on 14th September, 2015, followed by the second and third assessments on 31st October, 2016 and 10th July, 2018. The latest assessment was released on 5th September, 2020. In the fifth edition of the exercise, DPIIT has prepared a 301-point State Reforms Action Plan, 2020 and shared with States/UTs on 25th August, 2020. The Action Plan is spread across 24 reform areas with an addition of several sector-specific reforms to ensure sectoral coverage.

With an aim to take the reform agenda at grass-root level, DPIIT has also prepared and shared with States/UTs a 213-point District Reforms Action Plan, 2020 which is spread across 8 reform areas: Starting a Business, Urban Local Body Services, Land Reform Enabler, Land Administration and Property Registration Enablers, Obtaining Approval for Construction, Paying Taxes, Miscellaneous and Grievance Redressal/ Paperless Courts and Law & Order.

There is no specific funding of States/UT s for implementation of reforms. DPIIT supports states by organizing workshops/seminars for States/UTs to address concerns regarding implementation of Reform Action Plan.

DPIIT has prepared a 301-point State Reforms Action Plan, 2020 and shared with States/UTs on 25th August, 2020. The Action Plan is spread across 24 reform areas and seeks to promote sector-specific approach so as to create an enabling business environment across various sectors in the country. The various sector includes Trade License, Healthcare, Legal Metrology, Fire License/NOC, Cinema Halls, Hospitality, Telecom, Movie Shooting and Tourism.

This information was given by the Union Minister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

E-Commerce Retail Companies

Representations alleging violations of extant laws by e-commerce companies, have been received. In this regard, representations received are being examined by Department for Promotion of Industry and Internal Trade (DPIIT) and certain alleged contraventions under the FDI Policy, are also being investigated against certain e-commerce retail companies under provisions of Foreign Exchange Management Act, 1999 by the Directorate of Enforcement. Further, several complaints against e-commerce entities, including related associate/holding companies etc, which are operating as marketplace platforms, online sellers/service providers, search engines service providers operating in different verticals etc, regarding anti-competitive behavior, are being looked into by Competition Commission of India.

In order to provide clarity to the extant FDI Policy on e-commerce, DPIIT,had issued Press Note 2 of 2018 on 26.12.2018. However, no specific instructions have been provided by DPIIT to any e-commerce foreign companies having FDI, operating in Retail Sector. Department of Consumer Affairs, has released the Consumer Protection (e-commerce) Rules, 2020 on 23.07.2020, to clarify liability on e-commerce entities for goods/services provided. Mandatory declarations specifying country of origin, have also been imposed as requirement for e-commerce entities under the Legal Metrology (Packaged Commodities) Rules, 2011 as per O.M. WM-7(7)/2020 dated 03.07.2020 by Department of Consumer Affairs.

This information was given by the UnionMinister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

Impact of Coronavirus

The sudden outbreak of COVID-19 has severely impacted some of the major economies of the world. It has affected countries across the globe including some of the major players like USA, European Union, UK, and India.Both World Bank and IMF estimate contraction in global GDP for FY 2020-21 due to the spillover effects of the lockdown to curb the spread of COVID-19 pandemic. Various sectors were affected due to the nation-wide lockdown. However, after the lockdown was relaxed, we see significant improvement in several sectors of the economy.

Government has implemented several measures for the revival of industries which, inter-alia, include:

 

(i)      Relief measures for MSMEs such as collateral-free lending program with 100 percent credit guarantee, subordinate debt for stressed MSMEs with partial guarantee, partial credit guarantee scheme for public sector banks on borrowings of non-bank financial companies, housing finance companies (HFCs), and micro finance institutions, Fund of Funds for equity infusion in MSMEs, additional support to farmers via concessional credit, as well as a credit facility for street vendors (PM SVANidhi), amongst others.

 

(ii)    Regulatory and compliance measures: postponing tax-filing and other compliance deadlines, reduction in penalty interest rate for overdue GST filings, change in government procurement rules, faster clearing of MSME dues, IBC related relaxations for MSMEs, amongst others.

 

(iii)    Structural reforms announced as part of the Atmanirbhar Package which, inter alia, include deregulation of the agricultural sector, change in definition of MSMEs, new PSU policy, commercialization of coal mining, higher FDI limits in defence and space sector, development of Industrial Land/ Land Bank and Industrial Information System, revamp of Viability Gap Funding scheme for social infrastructure, new power tariff policy and incentivizing States to undertake sector reforms.

 

(iv)    Reduction in EPF contributions, employment provision for migrant workers; insurance coverage for workers in the healthcare sector; and wage increase for MGNREGA workers and support for building and construction workers, collateral free loans to self-help groups. Also, Government has launched National Infrastructure Pipeline, expandedPhase Manufacturing Programme, Production Linked Incentive Schemes and created Centralised Investment Clearance Cell for end to end support for investment.

India has responded positively to the Covid-19 challenge.  Indian manufacturers have enhanced production of PPE, N-95/N-99 masks, HCQ medicine and oxygen cylinders to meet the domestic/external requirements.  The Indian economy is known for its resilience and is expected to gradually return to its high growth performance in the coming months.

This information was given by the UnionMinister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

Single Window System

The Central Government is working on setting up a Single Window System for clearances and approvals of industry in the country. Despite the presence of several IT platforms for investing in India such as in departments of the Government of India and State Single Window Clearances, investors need to visit multiple platforms to gather information and obtain clearances from different stakeholders. To address this, the creation of a centralized Investment Clearance Cell which would provide end-to-end facilitation support, including pre-investment advisory, information related to land banks; and facilitating clearances at Central and State level was proposed and the same is also a Budget Announcement 2020-21.

The cell is being planned as a One-stop digital platform to obtain all requisite central and state clearances/approvals required to start business operations in India. The Investment Clearance Cell will be a National portal that integrates the existing clearance systems of the various Ministries/ Departments of Govt. of India and of State Governments without disruption to the existing IT portals of Ministries and will have a single, unified application form. This will eliminate the need for investors to visit multiple platforms/ offices to gather information and obtain clearances from different stakeholders and provide time-bound approvals and real time status update to investors.

All the concerned State Governments including Tamil Nadu and Central Ministries/Departments are being taken on board for the Single Window Clearance System.

 

Further, a GIS enabled land bank under Industrial Information System (IIS) is being developed, and it has been launched in a phased manner by the Department on 27th August, 2020 with integration of 6 States Haryana, Uttar Pradesh, Telangana, Gujarat, Odisha and Goa; other concerned states are being on boarded.

With the objective of facilitating investment, fostering innovation, building best in class manufacturing infrastructure, making it easy to do business and enhancing skill development, the Government is focusing on 27 sectors under Make in India 2.0. Department for Promotion of Industry and Internal Trade is coordinating action plans for 15 manufacturing sectors, while Department of Commerce is coordinating 12 service sectors.

This information was given by the UnionMinister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.

Boosting The Growth of Industries

Promotion of industries is a continuous and ongoing effort of the Government. Government has taken a number of steps, in addition to the ongoing schemes, to boost the growth of industries. The measures taken in a few important areas are highlighted below:

 

1. Atmanirbhar Package to boost Industrial growth has been announced by the Government for Rs. 20.97 lakh crore with bold reforms in a number of sectors.  The Emergency Credit Line Guarantee Scheme (ECLGS), having provision of Rs 3 lakh crores, is 100% credit guarantee and Collateral Free Automatic Loans for MSMEs. Financial support has been given to the stressed MSMEs with infusion of Rs.20,000 crore equity support through Subordinate Debt.   Fund of Funds created to infuse equity worth Rs.50,000 crore in the MSME Sector by setting up Rs.10,000 crore Corpus Fund. Also, Government is ensuring timely payment to the MSMEs by instructing all Government of India and CPSEs to clear all receivables of MSMEs within 45 days. Procurement from domestic companies is being encouraged by disallowing global tender in government procurement tenders upto Rs 200 crores.

 

2. Higher FDI has been allowed through automatic route in a number of sectors by streamlining and liberalising several sectors.Empowered Group of Secretaries (EGoS) & Project Development Cells (PDCs) have been set up in order to provide support and facilitation to investors for investing in India and to boost growth in key sectors of the economy.

 

3. A centralized Investment Clearance Cell is being created, which would provide end-to-end facilitation support, including pre-investment advisory, information related to land banks and facilitating clearances at Central and State level.

 

4. The Insolvency and Bankruptcy Code has been enacted in December 2016 to address India’s chronic problem of non-performing assets (NPA).

 

5. Corporate Taxeshave been reduced to encourage domestic manufacturing. With effect from FY 2019-20, corporate tax for domestic companies has been reduced to 22 per cent and for new manufacturing companies, incorporated on or after 01.10.2019, to 15 per cent.

 

6. In order to realize the economies of scale, incentives are extended to units as per annual increases in their production/sale under Production Linked Incentive (PLI) scheme. PLI scheme has been announced for large scale electronics manufacturing (Rs.40,955 crore), medical devices (Rs.3,420 crore) and KSMs/ Drug Intermediates and APIs (Rs. 6,940 crore).

 

7. In order to promote domestic manufacturing of sectors facing high imports or cheaper imports, incentives are provided through rationalization of Basic Customs Duty on identified products underPhased Manufacturing Programme (PMP).  Presently, PMP is in operation for Cellular Mobile Handsets and e-vehicles.

 

8. The Government has launched the National Infrastructure Pipeline (NIP) in December, 2019 to provide world-class infrastructure across the country and improve the quality of life for all citizens. As per Final Report submitted by the NIP Task Force, the projected total expenditure on infrastructure would be of Rs. 111 lakh crore during the period FY 2020-25.

India has responded proactively to the Covid-19 challenge.  Indian manufacturers have enhanced production of PPE, N-95/N-99 masks, HCQ medicine and oxygen cylinders to meet the domestic/external requirements.  The Indian economy is known for its resilience and is expected to gradually return to its high growth performance in the coming months.

As per IMF’s World Economic Outlook (WEO) (June 2020), in the year 2020, global economic growth is projected to contract by 4.9 percent. The COVID-19 pandemic has had a bigger negative impact on activity in the first half of 2020. Most economies in the group are forecasted to contract this year, including the United States (– 8.0 percent), Japan (–5.8 percent), the United Kingdom (–10.2 percent), Germany (–7.8 percent), France (–12.5 percent), Italy (–12.8 percent), and Spain (–12.8 percent).

As per the Global Economic Prospects Report(June 2020) of theWorld Bank, global GDP is expected to contract by 5.2 percent in 2020, the deepest global recession in eight decades, despite unprecedented policy support.

This information was given by the Union Minister of Commerce and Industry, Shri Piyush Goyal, in a written reply in the Lok Sabha today.