WOES OF DIFFERENT INDIAN SECTORS IN WAKE OF

COVID-19
-Deepshikha Trivedi

As the COVID-19 rages across the globe several issues continue to baffle us still
about the possible treatments of the new virus, availability and timeline of the vaccine
and most importantly how long will we have to stay locked inside putting our
personal and professional lives on hold.

Lockdown has only helped to slow down the progression of the infection and has
done next to nothing to actually eradicate the virus. The deemed goal of flattening the
curve inly gives the healthcare system a breather to prepare for the destruction
expected .The real problems though will start after the lockdown ends. As the
lockdown is extended again the serious damage to the economy and livelihoods is
apparent. Even when the ban is lifted several industries will not show revival for at
least a year and several will be lost to the pangs of hunger and loss of livelihood. Here
we explore how the different industries are faring and the ways of their possible
revival after lockdown.

MICRO, SMALL & MEDIUM ENTERPRISES

MSME sector seems to be hit the hardest due to this unforeseen halt in the economy
due to the pandemic gripping the world. Disrupted supply chains falling imports
bearish markets have led to 26% of the businesses taking a bad hit according to the
GOQii survey conducted recently.The problems of low liquidity and lack of
workforce as the daily wagers have to their villagers ahs resulted in dangerously low
sales and purchases for such businesses. The sector employs almost 12 crore people,
making a large number of the country’s households dependent on the 63 million
MSME units. It also accounts for a third of India’s manufacturing output and 45% of
exports.

The most recent measures adopted by the government to keep such business afloat
like introducing Long Term Repo Operations (LTRO) worth Rs 100,000 crore to help
banks increase lending at cheaper interest rates and extension of the last date to file
belated Income Tax Return for all businesses for the FY 2018-19 from March 31 to
June 30 are indeed commendable but sadly not enough to aid the ailing sector.More
proactive measure like deferring or relieving the MSMEs of loan repayments and
investing in online infrastructure to support these small businesses while ensuring
their ability to source locally are needed to give a boost to the manufacturing process
and cope with cash flow problems gripping the sector. Further the government needs
to act on its promise of building warehouses at block/taluka level to help the
businesses primarily into exports with inventory management.

The Covid-19 situation has put businesses in a tight situation but if the government
can take measures and ensure immediate action, it could reduce the blow to the
MSMEsegment.

ENTERTAINMENT INDUSTRY

The complete shutdown of cinema halls and multiplexes, for the forseeable future,
owing to the pandemic, has immense implications for the future of entertainment.Box
office revenues of the so called Indian Film Industry are bound to shrink and loss of
thousands of small jobs related to the industry is inevitable.In the absence of any
vaccine and cure at hand consumption of entertainment will see a massive change and
the road to normalcy would be long.

The big release like Akshay Kumar’s Sooryavanshi and Salman Khan’s Radhe have
been postponed indefinitely from their initial release dates and most of the upcoming
projects including web and OTT content have halted the production process in view
of the nationwide lockdown. Experts estimate the entertainment industry has already
lost more than a thousand crores because of the lockdown.This might be the first time
in the history of the world’s largest film industry that the entire boxoffice collection is
absolute zero.

According to a report published in the Financial Express the industry has faced a
whooping decline of 29.1% from last year with turnovers of 1499.4 Crore falling to an
all time low of 1062.4 Crore.The slowdown sadly will last post lockdown for months
to come as we may see a 50% drop in the footfalls in cinema halls due to the scare of
contagious virus.

The television industry though seems to bank on the popularity of off air classic
shows adored by the audiences and has managed to stay afloat by refreshing the
memories of its increased viewership as the people are locked in their houses. The
dose of nostalgia delivered to people in the form of shows like Ramayan and
Mahabharata on Doordarshan, Hum Paanch, CID on Sony etc have conveniently
filled the gaps created due to the halt in production of currently on air shows.

The hardest hit section in the entertainment industry is the daily wage earner like spot
boys, light men, linemen etc. who have a hand to mouth survival structure. The
industry giants have pooled huge donations to help these workers but the concern
remains that in a contact prone industry how will the safety of these workers be
ensured after the production resumes and how will the hygienic conditions be ensured
in such crowded work environments.

The only beneficiary of the current predicament are the OTT streaming platforms like
Netflix, Amazon Prime Video.These players clearly have an advantage with their
large libraries of content that is available to the customers from the safety of their
couches. As pr the KPMG report there has been a reasonable rise in the OTT
consumption across demographics and devices.It seems the current trend might
become a habit due to the scare of pandemics and the people prefer OTT even after
lockdown ends.

SPORTS INDUSTRY

The coronavirus pandemic has shuttered global sport, from North America’s National
Basketball Association and Europe’s football leagues suspended and the Tokyo 2020
Olympic Games postponed to Indian Premier League of cricket which was due to
begin in April.

The multi million dollar sports industry that has transformed the games played
recreationally for decades into multibillion-dollar enterprises by making the leading
athletes , protagonists in unscripted, unmissable dramas for thousands in stadiums or
billions watching on screens. Sport is a uniting passion. And, until the coronavirus
shutdown, a growing global market, with sales in sport services and related goods was
valued at an estimated $489bn in 2018.But now the model adhered to by the sporting
groups across the world is under threat. The three layered source of revenue for the
sporting industry i.e. broadcasting deals, sponsorship contracts and “match day”
income from tickets, hospitality and spending during events are directly affected by
the new social distancing measures necessary to be adopted in order to cope with the
COVID-19threat.

Broadcasters are re-evaluating both the value of current deals and business models
that are reliant on live sport to hold on to subscribers. Sponsors are slashing spending
in response to an impending global recession. The pay packets of leading athletes will
be depressed for months, if not years, to come. The “Big Five” football leagues and
their member clubs in England, Spain, Germany, France and Italy are expected to face
a collective hit of almost 4 billion euros.

The industry in a dire effort to cope is adopting some novel measures to keep its head
above water like capitalizing on the spike in media consumption by finding new ways
to engage consumers. In the absence of live games, this means deepening the pool of
content available to fans. For example, showing classic games, archived content,
documentaries, e-sports and niche competitions in a bid to keep consumers engaged
and interested.

REAL-ESTATE SECTOR

Indian real estate sector was just beginning to come to terms with the multiple reforms
and sudden changes brought in by demonetization, RERA, GST, IBC, and subvention
scheme ban. While the sector found it difficult to align with the slew of reforms and
changes, it was witnessing a revival in the past few months and the sector was on a
growth trajectory since the last few years but the current pandemic and the resultant
lockdown has surely put brakes on the momentum of its growth.Industry estimates of
the Indian real estate market, prior to COVID-19 outbreak, was projected to be 650
Billion dollars by 2025 and 1,000 billion dollars by 2030. This certainly seems tough
amidst the current circumstances.

Country-wide lockdown has acted as a cork in all activities of the sector. Project sites
are shut, site visits have stopped, and construction activity has come to a grinding
halt, thus impacting housing sales. Meanwhile, developers have also deferred their
new project launches for foreseeable future.

Besides residential segment, commercial real estate is also facing the brunt Covid-19
equally. Corporate occupiers are seen delaying their leasing decisions and still several
MNCs and businesses are testing new waters of the work from-home option. If proved
successful, it could impact leasing activities in the future.

Retail businesses, highly dependent on consumer spending, are also witnessing a

momentary slowdown and reduced interest from global brands who may now
consider revising their expansion plans.

After agriculture, real estate is the largest employment generator in the country. The
sector creates tremendous opportunities for the skilled and unskilled workforce. It has
also been instrumental in employing large masses of migratory populations that come
to the metropolitan cities in search of work. The present pandemic has caused the
nation to witness huge reverse migration of this labor force extremely essential to the
real estate sector. The biggest issue faced by the sector will be the dearth of labor
even after the lockdown is lifted. As a result, construction activities are set to be
delayed with many developers and contractors facing shortage of labour resulting in a
more pronounced liquidity crisis. The sector has witnessed significant job losses due
to the huge liquidity crisis in the past. As per industry estimates, around 300,000
workers had to be laid off as developers were unable to process their bills.

AUTOMOTIVE SECTOR

The Indian automotive sector was already struggling in FY20. before the Covid-19
crisis. It saw an overall degrowth of nearly 18 per cent. This situation was worsened
by the onset of the Covid-19 pandemic and the ongoing lockdowns across India and
the rest of the world. Supporting the lockdown, all automakers immediately
temporarily closed down which included Maruti Suzuki, Honda, Hyundai, Tata
Motors, Mahindra and Mahindra, Toyota Kirloskar Motors, Kia Motors and others.
Even the two-wheeler manufacturers Hero MotoCorp, Honda Motorcycle, Scooter
India, TVS Motor Company, Bajaj Auto, Suzuki Motorcycle and Yamaha have shut
down manufacturing.

The Society of Indian Automobile Manufacturers projected an estimated loss of INR

2,300 crore per day as the closure of auto original equipment manufacturing units and
component manufacturers and a total revenue loss of INR 48,300 crore in wake of
extended shut down of the automotive industry.

Within automobile sector, commercial vehicle industry, seems to be the one hit the
hardest with the COVID-19 lockdown. The nationwide lockdown affected freight
demand majorly tthus leading to a significant drop in the income of transporters.
Lower private consumption and availability of redistribution freight has hit demand
for light commercial vehicles as well. The government’s ability to push infrastructure
and even fund bus purchases has done little so far.

So far the situation seems to be extremely grim of for the Indian Automotive Industry
as projections predict that COVID-19 could drag the industry back by a decade.
Analysts say that almost all segments of the Indian passenger vehicle market are set to
see a decline over 10-15% in 2020-2021, fed with the lockdown suffocating
discretionary purchases through the first half of the year. Their estimates show that
from 3.4 million units at its FY19 peak, the Indian car industry could shrink by a
million to 2.4 million units. Two wheeler sales could plunge by 5 million units at the
end of FY21, from its peak of 21 million to an estimated 15-16 million.