In the immediate term, the Central Board of Indirect Tax and Customs (CBIC) is working on easing clearances of goods which arrive without proper documentation.
Banks have been told by the Centre to provide bridge loans to companies which have already paid to their suppliers in China but haven’t got the deliveries yet. Hence, they are undergoing a working capital crunch, officials said.
For the long term, the CBIC and the shipping ministry have been told to plan for times when the supply resumes. There is a huge influx of delayed shipments coming into Indian ports.
“Our strategy will be to watch and respond quickly, as we do not know how long this crisis will last. A flexible response is more important. We are continuously monitoring this very closely,” principal economic advisor Sanjeev Sanyal told Business Standard.
On Wednesday, finance minister Nirmala Sitharaman said the government was closely monitoring impact of the coronavirus
on the economy. Sanyal said the Centre was making sure that its response to specific cases was not held up by bureaucratic hurdles.These may be relating to certification or clearance at ports.
Sanyal also ruled out any import duty rollback. “I don’t think the duties are an issue because this is a supply chain problem,” he said.
Last week, Sitharaman met various industry bodies and stakeholders to deal with the fallout of coronavirus, which has infected about 80,000 people worldwide and killed around 2,700.
While the country has, so far, not seen a fatality, Indian industry has been under stress because of the dependence on China for raw materials.
The people who met Sitharaman included representatives from pharma, steel, metals, electronic manufacturers, tourism, telecom, marine products and other sectors. In the following days, Sitharaman will meet senior bureaucrats as well as officials from the Prime Minister’s office to chalk out India’s response.
“There are certain areas where we obviously have better visibility, like active pharmaceutical ingredients (APIs) in the pharma sector. We know what we don’t produce and we know who produces them outside and in the country,” said Sanyal.
Sanyal admitted that there are certain APIs that are almost entirely produced by China, and in the short term, there was no alternative to importing from China.
“We do have a few weeks of and in some cases a few months of stock. So, it is not like it will come to a sudden stop. But obviously, if this situation gets prolonged, then we have to think of what we will do. In cases where we can produce it ourselves, of course, we will ramp up production,” Sanyal said.
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“We need to make sure that the Customs and ports, among others, are functioning in a manner that they are prepared for a possible bunching of arrivals once the situation improves. To ensure smooth supply of auto components, we need faster certifications. Lastly, the trade missions around the world will help source various things from alternative sources,” Sanyal said.
Consignments are stuck at ports due to Chinese officials not being able to provide paperwork from their end as the nation’s bureaucracy is involved in tackling the coronavirus
These are the ones on which the Customs department has provided relaxation.
The finance ministry has classified the coronavirus outbreak as a natural calamity, and covered by the force majeure clause.