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This is the second part of a two-part series surrounding surviving the effects of the pandemic in India:

  • Part 1 focuses on force majeure’s impact on contract management’s effectiveness in India.1
  • Part 2 surrounds how the supply chain solution can survive under the pandemic’s impact and why it’s now time for India to “think beyond its border.”

1-Oct-27-2021-02-07-53-61-PMWe all know too well how, during Covid-19, countries struggled to stop its spread by severely restricting travel and in-person commercial activities. The world has sailed through the first phase, then the second one which was even more deadly – and now as some countries are experiencing the third wave, India is feeling the trigger as well. It is quite understandable that Covid-19 has impacted the economies adversely and not even the developed nations have been able to safeguard themselves fully.

1-Oct-27-2021-02-07-53-61-PM

We do not yet know the overall impact of the outbreak and the resulting emergency measures on international trade and its associated supply trading mechanism resulting from COVID-19. It has changed the business environment for many organizations worldwide, highlighting the importance of being able to react, adapt and set up crisis management operations to weather the uncertainties.

It is therefore pertinent to understand that supply chain losses related to COVID-19 lockdowns depend mostly on the number of countries imposing restrictions. Such losses are more affected by the duration of a lockdown than its strictness. We have seen how severe disruption is driving enterprises to make their supply chains more resilient, collaborative, and network based.

No doubt the supply chain ratio2 percentage of stock received on or before the requested ship date for all the countries has become negative, and to revive this, India and other countries will have to think and act beyond their borders. Technology and digital supply chain management operations need to be planned strategically before we can expect to revive and grow in the future.

3-4

  • Rearranging stock to areas less impacted by Covid-19 and places where the lockdown is relaxed so that the stock can be transported to desired destinations.
  • Securing capacity and delivery status including advance procurement and bulk order placement so that supply chain is not affected in the next phase of Covid.
  • Activating pre-approved parts or raw-material substitutions in places where the primary supplier is impacted but a secondary supplier is not.
  • Investing more time and resources in Research and Development and invent better ways to ensure continuity of products and solutions for their customers.
  • Decentralizing their supply chain base by opening new hubs and offices at various parts within the country to ensure continuity of operations.
  • Advancing intimations to customers regarding delay in delivery and in meeting the contractual commitment.

The Indian Context – Aatmanirbhar Bharat Abhiyan

In response to broken business value chains India is endeavoring to curb supply chain crisis and recognizes an exclusive opportunity to emerge as a preferred business destination during and after the COVID-19 pandemic. To move this opportunity forward, the Hon’ble Prime Minister of India has laid-out his vision of an ‘Aatmanirbhar Bharat’ (Self-reliant India) by outlining five pillars for successful results:

  1. economy
  2. infrastructure
  3. system
  4. demography
  5. demand

This initiative envisions a robust framework for undertaking self-reliant reforms and planning long-term development. The goal is to mitigate the devastating social and economic impact of COVID-19 lockdown by promoting Indian products and encouraging the development and prosperity of medium and small industries.

Lockdown in China is of concern as well

It is vital to realize that our world observed adverse impact on supply chain due to lockdown in China. Many companies are forced to move their base out of China and have opted to relocate to different locations across the globe to ensure smooth operations in future offshoring operations. They are often consolidating their manufacturing bases specifically in low-cost economies. Some companies are starting their operations in India, a nation looking for new investment partners to meet its consumption requirement and improve its livelihood opportunities for its people.

India has become the point of attraction for companies to start their manufacturing and operations. India has been aggressively working with the Ease of Doing Business index and is using the Single Window strategy for helping businesses achieve smooth government approvals to save time and cost.1

Since companies are looking for new market, it’s time for India to invite them to invest and contribute to the growth. Moreover, to ensure a smooth process, India may consider incentivizing the investments by making land availability for investors at subsidized rates. The state governments will have to work on building the capacity of their governance frameworks and avoid issues of clearances and labor.

Albeit Covid challenges, new opportunities are available. Though the Covid-19 pandemic poses severe risks for India’s economy, it also presents opportunities for Indian domestic firms. The restructuring of global chains will reshape the global trade and investment landscape. New regional chains, distributed manufacturing and production networks will increase in numbers and expand. Domestics firms must respond and therefore:

  • plan early to scale up globally;
  • tailor business models to new markets;
  • get to know new competitors;
  • develop global talent; and
  • prepare for shocks and volatility in an increasingly interconnected world economy.

The legal opinions in this article are the author’s own, not WorldCC’s, and this is not legal advice.

END NOTE

  1. How to apply Force Majeure clauses under the Covid new normal? Part 1
  2. TCS DigiGOVTM Ease of Doing business (EoDB) – an article that lists benefits and advantages of this EoDB.  

See also Wikipedia definition of the index part of which states “…The ease of doing business index is meant to measure regulations directly affecting businesses and does not directly measure more general conditions such as a nation's proximity to large markets, quality of infrastructure, inflation, or crime...”

ABOUT THE AUTHOR

Mohit Khullar is a Contracts and Commercial management professional with more than 20 years of experience in Management Consulting and advisory on negotiation, dispute resolution, commercial management, debt management and project controls. He has a master’s in business administration from IMT Ghaziabad, India and CCCM from NICMAR India.

ABOUT SMEC

SMEC is a global engineering, management and development consultancy delivering innovative solutions for our clients and partners. Leveraging a 70-year history of delivering nation-building infrastructure, they provide technical expertise and advanced engineering services to resolve complex challenges across the project lifecycle, from initial concept, feasibility, planning and design through to construction, commissioning, operation, and maintenance.

Content reflects views and opinions of the author and do not necessarily reflect the views and opinions of World Commerce & Contracting.

Mohit Khullar Head - Management Services, SMEC (India) – a Surbana Jurong Group Company


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