COVID-19 Impact on Key Industry verticals in India

Market Research Report

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COVID-19 Impact in India

Profound surge in unemployment as lockdown measures halted businesses and

economic activities.
Overvie Developmen
• Surge in cases led Trends
w tsto increased demand • Growth in telemedicine, health tech
Largest GDP Contraction for medical supplies; capacity enhanced
startups, and increased investments in
Q2 (April–June) FY2020–2021 saw a record GDP with temporary hospitals and more ICU
healthcare infrastructure.
contraction of -24%. beds.
• Significant shift towards remote
• Massive vaccination campaign
working, increasing demand for
Unemployment launched, with over 1 billion doses
collaboration tools and cybersecurity
Sharp rise in unemployment rates, indicating administered by the end of 2021.
solutions.
significant economic challenges and potential social
impacts as job opportunities diminish. • Introduction of Atmanirbhar Bharat
• Businesses focused on building more
(Self-Reliant India) economic package
resilient and localised supply chains to
worth INR 20 lakh crore (approximately
Supply Chain Stress mitigate future disruptions.
USD 266 billion).
Significant strain on supply chains, disrupting the
availability of goods and services, which led to • Rapid digital adoption, remote work,
• Nationwide lockdowns and phased
inflation and economic uncertainty. government initiatives for digital
reopening to control virus spread,
payments, online education, and
impacting businesses, mobility, and
telehealth.
Consumer and Trade Impact daily life.
PRE AND POST COVID -19 IMPACT ON INDIAN STOCK MARKET (NSE -NIFTY
Reduced consumer activity, a plunge in fuel
consumption, a rise in LPG sales, and trade tensions
50)
with China.

Market Crash
COVID-19 and lockdowns caused a market crash;
Sensex dropped from 42,273 to 28,288 points in a
week exacerbated by the Yes Bank crisis impacting
the BFSI sector.

Sources: IBEF; Statista; ResearchGate

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Impact on Business- 1/2

COVID-19 accelerated digital transformation, exposed vulnerabilities, and

drove innovation across Indian businesses.
KEY TAKWAWAYS (Impact on Small Businesses)
More than 82% of small The lockdown and
• More than 82% of surveyed Small Businesses were negatively impacted by COVID-19,
businesses in India were restrictions on
with manufacturing sector at 87% and services sector at 78%
negatively impacted by transportation
COVID-19, with the caused disruptions in • Top challenges for scaling up: Market Access (42%), Productivity Improvement (37%),
manufacturing sector the supply chain, and Access to Finance (34%).
being the most affected affecting the
(87%) and the services
Retail
movement of raw
• Key support measures needed: Better Credit Facility (59%), Marketing Support (48%),
and Technology Adoption (35%).
sector
being the materials and
from
products • Emphasis on Credit Score is the key challenge for accessing credit as stated by 35% of
second most suppliers to
the respondents and collateral requirements cited by 32%.
affected Revenue 2019-
customers. • Around 50% of the respondents believe that a credit score by a third party on their
(78%) COVID-
20): credit worthiness and capabilities will benefit them
Revenue: 2020-
19 and • Over 40% of small businesses use market intelligence sales tools and 50% of small
21:
Impacts businesses without market intelligence sales tools plan to adopt them.
The pandemic • More than 40% of small businesses using market intelligence sales tools have utilized
accelerated the third-party assistance to connect with global prospects.
shift towards
digital • 82% of small businesses digitized daily operations during the pandemic.
• Key benefits of digitization: Cost Reduction (54%), Enhanced Competitiveness (51%),
transformation, with The pandemic led to and Better Customer Understanding (45%).
around 82% of small significant job losses, with • Digitization helps address traditional challenges: Increased Customer Focus (62%),
businesses digitizing around 38 million jobs lost Improved Data Security (43%), and Product/Service Evolution (40%).
their daily operations in the tourism and
• 66% of the respondents are planning to leverage Next Generation Technologies like
during the pandemic hospitality industry alone .
Artificial Intelligence (AI), Machine Learning (ML) and Industrial Internet of Things (IoT)
for their business operations

Sources: Dun&Bradsheet; Research Gate

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Impact on Businesses- 2/2

Businesses in India adapted to the COVID-19 crisis through digital

transformation, operational resilience, and strategic diversification.
Adapting to Change: How Different Business Models in India Navigated the COVID-19 Crisis
Impact Adaption

Faced funding challenges and operational Pivoted business model and innovated with leaner operations, focused on niche
Startups disruptions due to economic uncertainty. markets, and accelerated digital transformations to enhance agility.

Managed to withstand disruptions better due to Accelerated digital transformation,, and focused on online sales and customer
Established Businesses existing customer base and financial stability. engagement. Implemented robust crisis management protocols, streamlined
operations, diversified product lines, and strengthened digital infrastructure for
remote operations.
Global Businesses Faced challenges with global supply chain Localized operations, diversified supply chains, increased use of digital
Operating in India disruptions and varying pandemic responses across platforms for remote work, and diversified market presence to reduce
different countries. dependencies. on global communication and collaboration.
MSMEs (Micro, Small, & Vulnerable to financial strain and operational Leveraged government support programs and stimulus packages, pivoted to
Medium) disruptions due to limited resources. online sales channels, and streamlined operations to improve cost efficiencies
and explored new revenue streams.
Service Based Business Dependent on physical interaction, leading to Adapted service offerings to focus on essential needs, adopted virtual service
decreased demand and revenue loss. delivery models, and invested in digital marketing for outreach.

Family-owned Businesses Faced challenges in continuity planning and Implemented agile family governance structures, diversified revenue streams
adapting to digital transformation. through strategic partnerships, and invested in digital transformation for long-
term sustainability.
Online and Digital Initially faced increased demand but needed to Innovated with personalized customer experiences, leveraged data analytics
Businesses navigate market saturation and customer retention for targeted marketing campaigns, and diversified revenue streams through
challenges. digital platforms.
Community-based Dependent on local consumer support and Strengthened local partnerships, launched community-focused initiatives for
Businesses community engagement. social impact, and enhanced online presence for broader outreach and
engagement.

Sources: Economic Times; Ministry of MSME, Government of India; Live Mint; Ministry of MSME; Business World…

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Economic sectors and Industries at risk- 1/2

COVID-19 reshaped market sizes, driving growth in digital sectors while

shrinking traditional ones.
Market Size, during and Post Pandemic

The COVID-19 The COVID-19 pandemic

Manufacturing sector pandemic significantly Technology sector in strained India's Travel & Tourism
in India (US $bn) altered the retail India (US $bn) healthcare industry but market in India (US
landscape in India in also spurred rapid
600 50 $bn)
2020, forcing retailers innovation and digital
400 to adapt quickly to 45 adoption. The sector 20
changing consumer quickly adapted, utilizing
200 behavior and 40 10
telehealth and
0 technological 35 government support to 0
2019 2020 2021 2022 advancements to 2019 2020 2021 2022 2019 2020 2021 2022
enhance healthcare
survive the crisis. delivery and manage the
India India crisis effectively.
India

Retail market in India Healthcare Industry in

(US $bn) The COVID-19 pandemic The COVID-19 pandemic
The COVID-19 pandemic India (US $bn) severely disrupted India's
disrupted India's
led to a sharp decline in 2000 technology industry but 400 travel and tourism industry,
production, with the 1500 accelerated digital 300 causing financial losses, job
manufacturing sector 1000 transformation and 200 cuts, and operational
experiencing, 39.3% 500 innovation. The industry 100 challenges. However, the
decline in production in Q1 quickly adapted, industry has shown resilience,
0 0
2020-21 due to supply 2019 2020 2026(F) 2030(F) leveraging increased 2016 2017 2020 2022 leveraging digital
chain disruptions, job demand for digital transformation and
losses, and challenges in India solutions and India government support to
adopting work-from-home government support to navigate the crisis and move
model. navigate the crisis and towards recovery.
achieve growth.
Sources: IBEF: MacroTrends; Nasscom

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Economic Sectors and Industries at Risk- 2/2

Navigating the New Normal: Supply Chain Disruptions, Inflation, and Digital
Transformation - The Triple Threat to Business Resilience
Indian Industry Trends, Pre and Post COVID 19

Manufacturin Retail Technology Healthcare Tourism

g

Steady Growth (E-

Revenue 2019 (Trend) Positive Growth
commerce rise)
Strong Growth Positive Growth Strong Growth

Revenue 2020 (Trend) Mixed (Impacted by Slowdown (Brick-and-

Continued Growth Accelerated Growth Drastic Decline
COVID-19) mortar impacted)

Supply Chain Disruptions: Yes Yes Yes (Some sectors) Yes Yes
2020
Profit/Loss 2019 Profitable (Generally) Profitable (Mostly) Profitable Profitable (Mostly private) Profitable

Profit/Loss 2020 Varied (Losses in some Varied (Profitability

Profitable Varied Losses
sectors) declined)

Sources: McKinsey Reports; IBEF: Nasscom

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Impact on Employment

The Covid-19 pandemic led to a profound surge in unemployment as lockdown

measures halted businesses and economic activities.

The Employment Situation in Unemployment % in

India in 2020 Unemployment % in 2020
India (2015-2022)
12
30 25
The economically backward classes faced
severe impacts due to limited access to 10
25 20
healthcare and resources and job losses due 20
to social distancing. 8 15
15
6 10
Between February and April 2020, nearly 46% 4
10
of households experienced a fall in income. 5 5
2
0 0
0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2015 2016 2017 2018 2019 2020 2021 2022
Government Support: Aid from
the Pradhan Mantri Garib Kalyan India Urban Rural India
Yojana
• According to a Business Today report, India's unemployment rate reached its highest level since 1991 in April
Funds Distributed: 312 billion INR
distributed to 331 million beneficiaries.
2020 due to the economic halt caused by COVID-19.

• The Center for Economic Data and Analysis reported that India's unemployment rate surged to 10.2% in 2020
Target Groups: Women, construction from 6.51% in 2019. Although there was a decline in July-August 2020, the onset of the second wave of
workers, farmers, and senior citizens. COVID-19 exacerbated the issue once more.

• From April to May 2020, 87% of urban self-employed respondents reported job loss due to COVID-19. The
Additional Aid: Announced in mid-May to highest job loss was among casual workers in rural areas. Hence, Employment loss was more pronounced in
support small businesses through the crisis. urban areas compared to rural regions during this period.

Sources: Business Today; Statista

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