Rethinking Business Models…How COVID-19 Affected Indian Business

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The emergence of the novel coronavirus has drastically altered Indian business models overnight. Companies faced a unique challenge: either resist the status quo or innovate. Lockdowns have halted operations, forcing a significant shift in consumer behaviour. Consequently, every business sector had to rapidly reassess their strategies.

More than 82% of small Indian firms were adversely affected by the pandemic, with manufacturers bearing the brunt of the crisis. An estimated 70% of businesses anticipated a recovery period of at least a year before demand returned to pre-pandemic levels. India’s trade impact alone was projected at $348 million in exports and $150 million in imports. In response, digitisation, diversification, and agile strategies became imperative.

This blog explores the deep influence of the pandemic, starting with COVID-19 deaths. There have been lockdowns because of the global health crisis and even COVID-19 cases in India. Then the blog discusses how businesses innovate in the face of these challenges.

Key Takeaways

COVID-19 has severely disrupted Indian business operations across all the sectors.
MSMEs and startups were the ones that experienced the hardest hit due to limited resources.
Digital transformation has become critical for business continuity.
The government of India provided short-term loans & support, but long-term recovery varied.
The pandemic accelerated my adoption of remote work and digitalisation.
Resilience, agile culture, and nurturing innovation have now turned into survival strategies.

Understanding the COVID-19 Impact on Indian Businesses

The pandemic brought staggering cases to India, counting over 44 million confirmed cases and nearly 530,000 deaths. The country experienced prolonged nationwide lockdowns that brought economic activities in every sector to a standstill.

Source: Economic Times

Did You Know?

Over 82% of Indian small and medium enterprises (SMEs) have faced negative impacts from the COVID-19 pandemic. More than 70% of them believe it will take more than a year to fully recover.

The Early Impact: Lockdowns and Economic Disruption

A sudden shock to the Indian economy occurred when the first national lockdown happened in March 2020. According to Dun & Bradstreet:

More than 82% of small firms reported operational disruptions.
Manufacturing was severely affected, with 87% of the manufacturers experiencing critical issues.

COVID-19 Toll and Economic Contraction

Since counting began, over 500,000 deaths have been recorded by mid-2021.
The GDP contracted 7.3% in FY 2020-21, the worst since independence.
ADB projected economic growth to plunge to 4%, as against 6.1% in 2019.

Impact on Operations and Cash Flows

In the wake of the COVID-19 outbreak, over 50% of Indian companies see the impact on their operations, and nearly 80% have witnessed a decline in cash flows, as per the FICCI survey.

Sectors such as tourism, hospitality, aviation, retail, and entertainment were hit directly, and operational challenges were put forth before the manufacturing and service firms. It also fast-tracked digital adoption and innovation in the Indian business landscape.

Challenge	% of Respondents Affected
Market Access	42%
Productivity	37%
Access to Finance	34%
Compliance Issues	31%
Unfavorable Market Conditions	30%

Source: The Hindu

Did You Know?

The estimated trade impact of COVID-19 for India reached $348 million, reflecting widespread disruption.

Impact on Tourism, Travel, and Retail

The tourism and hospitality sectors have fared the worst, perhaps. With international borders shut and domestic travel drastically reduced, the number of visitors to shopping complexes and cinema theatres has drastically decreased. This has hence affected the retail sector, leading to the reduced consumption of both essentials and non-essentials.

Innovation for Healthcare and for Medical Supplies

The second wave came as a reality check for India’s healthcare infrastructure. The scarcity of hospital beds, oxygen cylinders, and vaccines threw the nation into immediate care:

Companies into PPE kits, sanitisers, and ventilators turned this crisis into profit centres.
Innovation in medical technology and public health surveillance became national priorities.

Source: Business Standard

Did You Know?

A modelling study published in The Lancet revealed that 4.2 million COVID-19 deaths were averted in India in 2021. This significant reduction was attributed to the vaccine rollout.

Supply Chain Disruption and Employment Losses

More than 60 per percent of companies reported disruption in their supply chain, with several expecting further deterioration. Delays were being registered in payments, including wages, loans, taxes, and so forth, leading to:

Job losses: 38 million, mostly in tourism and aviation.
Driving demand for transport fuels down.
Slowing down logistics and manufacturing severely.

Business Adaptation and Strategic Responses

Despite the disruptions, several Indian corporate entities chose to embrace change:

New business models had been formed.
Digitisation had become the enabler of continuity.
E-commerce integration soared.

Source: Economic Times

Did You Know?

The pandemic turned out to be a game-changer for Indian e-commerce markets. They are expected to reach $111 billion by 2024. This surge is due to more people turning to digital platforms and starting to shop online during the lockdown.

Workplace Safety and Post-COVID Guidelines

In view of business continuity:

Forty per percent of companies set up systems on-site for screening and sanitisation.
Thirty per percent gave WFH options.

Government Support and Aatmanirbhar Bharat

The economic package announced by the central government may accord a momentary glimmer of light at the end of the tunnel. But industry leaders know that once the storm is over, it will be a hard road to recovery, and it will take far more than building greater competencies in the domain of technical skills to get the job done.

The Government of India had put into operation:

An economic stimulus package for MSMEs.
Making business loans very easy to get.
The Aatmanirbhar Bharat initiative is expected to further cement local supply chains.

The Road to Recovery: What Lies Ahead

21 days lockdown is a first step which buys India time to improve its preparedness. The country will have to significantly increase the number of COVID 19 tests. This will help reduce the fog of uncertainty as regards where hotspots are.

India would now plan for what happens after the lockdown if the virus is not defeated. It will have to restart certain activities in certain low infection regions with adequate precautions.

India will have to ensure that in the meantime poor and non-salaried lower middle class who are prevented from working for longer periods can survive. Direct transfer to households may reach most, but not all, and the quantum of transfer seems inadequate to see a household through a month.

India will have to ensure that the poor and no salaried lower middle class, who are forbidden from working longer, can survive. Direct transfers to households could reach most, but not all, and the quantum of the transfer does seem quite inadequate to see a household through a month.

With the virus coming under control, the businesses are cautiously optimistic:

Phased reopening from the low-infection areas is the key.
Economic activities would start rebounding by Q4 of FY 2020-21.
The recovery efforts are therein to strengthen financial resilience, adopt technology, and take care of the well-being of employees.

Is Your Business Model Future-Ready After the COVID-19 Shock?

Transform Your Business Model Now

How Can AITD Assist Companies in Rethinking and Reshaping Their Business Model?

The Amity Institute of Training and Development (AITD) offers corporate training and bespoke training solutions to help businesses recover and grow:

1. Conflict Management

Develop collaboration skills and work around problem-solving within post-pandemic places.

2. Change Management

Empower teams to sympathetically empathise with uncertainty and to lead through disruption.

3. Digital Transformation

Build upon digital adoption, innovativeness, and competitive advantage.

We are committed to enabling Indian businesses through training, leadership development, and strategic capacity-building for sustainable growth.

COVID-19 was a wake-up call for Indian businesses; it exposed vulnerabilities while triggering innovation. Going forth, resilience, adaptability, and digital readiness will shape the future of Indian businesses. Institutions like AITD offer businesses the chance to emerge stronger, agile, and future-ready.

What Can Indian Businesses Learn from the Pandemic’s Hardest Lessons?

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