Industries turn to govt for relief as Covid hits business

Tribune News Service

New Delhi, March 16

With several nations already announcing interest subvention and cash handouts, the Indian industry has also asked the government to provide urgent relief from decline in economic activity due to coronavirus.

The industry has suggested lower interest rates and introducing a new insurance policy that covers disruption to business caused by the epidemic.

“Indian exporters find themselves in a state of turmoil as trade in the country’s top destinations has been paralysed, making it imperative for an urgent relief measures for the exporting industries,” said the Engineering and Export Promotion Council (EEPC).

The country’s leading business chamber, the Confederation of Indian Industry, also expressed its impatience over the absence of any initiative by the government.

“Global policymakers are trying to support financial markets and the real economy through coordinated policy actions. It is time that the domestic policymakers also join in orchestrating the coordinated policy response,” urged the CII.

“In fact, the RBI should not hesitate to cut rates by even a larger proportion, in line with global central banks,” said CII Director General Chandrajit Banerjee.

Traders on the other hand have asked the government to direct insurance companies and the regulator to come up with insurance policies to cover the disruption caused to businesses due to coronavirus.

In a letter to Finance Minister Nirmala Sitharaman, the Confederation of All India Traders (CAIT) wanted insurance companies to introduce a new policy “Disruptions due to Coronavirus”. Traders argue that business interruption insurance is already available in several countries. “We request you to kindly advise the Insurance Regulatory Development Authority (IRDA) to mandate insurers in India to introduce insurance coverage for disruptions in business due to coronavirus,” said CAIT Secretary General Praveen Khandelwal.

He noted that several educational institutions, cinema halls, gyms and other service-oriented businesses have been shut temporarily as precautionary measures.

Both trade and MSME sector is likely to have negative economic impact as many industries and trade may end up closing or face disruption in supplies, cancellation of events, contracts, travel among others and each of these have significant costs associated, he said.

Exporters point out that trade is crippled in most of India’s major export destinations due to a near collapse of global supply chain even as the cargo movement has stopped. The warehousing capacity is over-stretched with severe blocking of export finance. The international shipping lines are affected.

“Even the urgent and less bulky cargo through air routes is paralysed with the airlines trimming their operations,” said EEPC Chairman Ravi Sehgal.

The CII also demanded that the RBI should take definitive steps to prevent the build-up of stress in the banking sector. “The RBI needs to consider more constructive and frequent dialogue and engagement with the industry and banking sector to identify and make timely interventions in such instances of irregularities as in case of Yes Bank,” suggested the CII DG.