The impact of COVID-19 in the world


The number of cases of COVID-19 has crossed 200,000 and the number of deaths worldwide has exceeded 8,000, the World Health Organization (WHO) reports that the virus has spread in the second week of March 2020. The first headlines were made.

Approximately 162 countries are fast locked up and businesses are moving around the world for fear that the global financial markets are imminent. This has led to very volatile market conditions, especially in a developing country such as India, coupled with sluggish economic growth over the past year. Let us understand how coronavirus affects business in India and subsequent tax reforms.

With rising unemployment, interest rates and fiscal deficits, the economy in India has seen better days. Adding fuel to this fire is the novel Coronavirus, which is sending Chinese-based Indian commercial markets for imports.

Raw materials and spare parts

55% of India's imported electronics originates from China. These imports have already fallen to 40% due to coronavirus outbreaks and subsequent lockdown. In retaliation, India is considering encouraging domestic production to reduce its dependence on the single market. In addition, China is India's third largest export partner for the export of raw materials such as organic materials, mineral fuel, cotton, etc. Countries' lockout is expected to result in a huge reduction in trade for India.

Pharmaceuticals

The toll on the industry sector is of great concern to India, as 70% of active products (APIs) are imported mainly from China. These active cement materials are required by a large number of cement manufacturers in the country. As COVID-19 is rapidly entering India, the drug market is in the forefront of consumer demand and its lack of APIs to manufacture drugs, its aftermarket and market prospects are seeing a 50% increase in the price of vitamins and penicillin.

Tourist

India is big in cultural and historical tourism and attracts both domestic and foreign nationals throughout the year. It is not surprising that a large number of confirmed COVID-19 cases in India involve foreign tourists. With visas being suspended and tourist attractions closed indefinitely, the entire tourism value chain, which includes hotels, restaurants, attractions, agents and operators, will suffer billions of crores. Experts believe that the tourism industry has suffered a major setback and could weaken the industry for the foreseeable future.

Aviation

After the Indian government's indefinite postponement of the tourist visa, airlines were asked to work under pressure. About 600 international flights to and from India have been canceled for different periods. About 90 domestic flights have been canceled, which has greatly reduced flight fares on local routes. Private airport operators have requested the government to allow them to charge nominal passenger comfort fees on airfares to cover increased operating costs.

Can rationalizing tax rates or granting tax relief curb COVID-19's impact on the Indian economy?

Gita Gopinath, the chief economist of the International Monetary Fund (IMF), spoke of measures to counter the economic impact of the rapidly spreading coronavirus, saying that government policymakers need adequate targeted economic implementation. It also pointed to broader monetary stimulus and policy rate cuts to help normalize the financial situation.

India is already low on its GST revenue collection, and coronavirus fear may worsen matters. With less than 200 active COVID-19 cases out of a population of 1.33 billion, the Government of India is not in a hurry to make any changes to the policy and provide tax relief (although Indian company leaders are calling for an import duty cut huh). However, he announced the extension of the GST filing for the financial year 2018-19 till June 30, 2020. India has canceled mandatory e-challan entry by October 1, 2020.

Diagram showing the progress of learning habits Every crisis serves as a learning opportunity for organizations and this epidemic has proven to be a lesson. Here is how organizations can determine their next moves.

Remote Working

With major cities on lockdown, companies have no choice but to pursue their business continuity and contingency plans. Since the first COVID-19 case in India was confirmed, most companies have started V work from home exercise using critical resources to understand if remote working conditions are possible. Is. That being said, remote working also has its limitations and cannot be done by other sectors such as retail, hospitality or manufacturing, other than to face business disruption.

Safety measures for employees

Employee safety is the need of the hour. However, due to a lack of experience with the virus, which is capable of spreading rapidly, many companies are shaking hands by telling employees to stay at home. However, some companies are implementing measures such as temperature checks, disinfection of office premises, the establishment of COVID-19 response teams, and distribution of COVID-19 precautionary packages.

An open way of communication

Although the death rate of COVID-19 was lower than the 1918 influenza pandemic, it caused panic attacks due to unclear communication. Companies maintain open communication with all their stakeholders, including employees and customers.

Opportunity in crisis

Like India, many international economies are aware of the risk of relying too much on one market. Taking the current situation as a learning opportunity, CXOs of Indian multinationals who attended the recent Confederation of Indian Industry (CII) Annual Meeting believe that it is time for Indians to gain a 40% share of their competitive market. . Commodity production will further the country's Make in India campaign.

The views expressed in this article are the personal opinions of Manjula Mutukrishnan, Managing Director of Avalara Technologies Private Limited, India.



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