The rampant spread of COVID-19 pandemic, across borders and geographies, has put global economy in recession with global economy projected to shrink by 3.2% (UN DESA). The disruptions caused by the outbreak and containment measures have left deep impacts on supply chains of manufacturing sector.  Companies across the globe have been scrambling to streamline their supply chains to secure immediate operations.  The economy of India is not an exception and the Indian industries including the food processing industries and MSME are severely affected. MSMEs are an important part of larger supply chains and their health has a bearing on the supply chains overall and indeed ability to supply major consumer product categories. Therefore, substantive support measures are required to see MSMEs through this crisis.

It is important to note that the food processing sector is recognised as a sunrise sector in India. The $600 billion industry currently employs close to 70 lakh workers, including around 15 lakh women. Furthermore, it has a massive potential to unlock the economic value of agricultural produce, thus facilitating the national agenda of doubling farmers’ income by 2022.

The ministry of food processing Industries recently announced the setting up of a task force to address some of the pressing concerns faced by the units. A closer look at some of these challenges highlights the need to understand the structural nature of the issues affecting the sector. It is evident that COVID-19 Crisis offers an urgent and much needed reset point for India’s Food Processing Industry.

The current Government is appeared to be committed to support the food processing industries and MSME in general for reviving their businesses and it is pertinent to highlight here the recently announced Financial and regulatory supports by Honourable Prime Minister and Finance Minister as part of the clarion call on ‘Atmanirbhar Bharat”. It is expected that industries will tide over the huge blow caused by the lockdown and able to provide more and creating more employment in coming years.

COVID-19 has revealed the weaknesses of a globalized manufacturing system and in order to respond, companies need to fundamentally rethink supply chains. In a post-lockdown world, supply chain stress tests will become a new norm.

It has moved from playing a “behind the scenes” organizational role to being a prime driver of the company business. Companies must have now appropriate ‘re-calibration’ strategies for modifying their supply chains as a key business driver and putting back the human asset as the most important factor for an agile business to succeed.

There are huge opportunities for Indian companies and would encourage them to attract international capitals and investment for creating a new manufacturing hub in India. This is possible, as many international manufacturers now looking into India considering its pro-business and FDI environment.   It is believed that our Industries need to strengthen on three fronts: cost (cheaper labour), quality (high skilled workforce), and supply chain (robust infrastructure), India can call itself the next global factory in future. We shall promote a ‘culture of manufacturing’ in India which is prevalent in a few countries such as Germany and South Korea, and closer home in South East Asia. We need to attract our best brains and encourage them to join the manufacturing sector. We need to establish manufacturing linkages. The lack of infrastructure pushes up the logistics cost, which at 14 per cent of GDP is one of the highest globally.  Our industries shall be able to present to the world the enormous opportunities that India offers as a base for manufacturing, innovation, design, research and development.

Keshav C Das

New Delhi, 31st May, 2020

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