Managing the impact of COVID-19 on - EY

1 Managing the impact of COVID-19 on India's supply chains Now, Next and Beyond July 2020. 1. Managing the impact of COVID-19 on India's supply chains Now, Next and Beyond Foreword History will remember the coronavirus ( COVID-19 ) pandemic as one of the biggest black swan events. The economic and social disruption caused by COVID-19 is expected to be far worse than that of the 2008-09 Global Financial Crisis; and perhaps might even beat the Great Depression of the 1930s. The economic impact of COVID-19 will be a function of the magnitude and speed at which it continues to spread and the duration over which it lasts. Containment is the current strategy, but unless the world gets an effective vaccine for mass scale use or a medicine to treat, containment measures like lockdown will dry up revenues and resources.

2 With globally integrated supply chain models completely disrupted, the pandemic will have long lasting impact globally, on all fronts social, political, technical, industrial and economic. EY's Government & Public Sector community has been working closely with governments from across the world to Gaurav Taneja prepare economic revival strategies and help them adopt Partner digital technology to create new ways of working. In India, Government & Public Sector EY is working with more than 18 states, 15 central (GPS) Leader, EY LLP ministries and 210 districts on several immediate initiatives, such as Invest India's business immunity platform, to resolve problems pertaining to procurement of raw materials, logistics, regulatory approvals as well as preparing a strategy to lift the lockdown in phases.

3 Our Hon'ble Prime Minister Narendra Modi, in his address to the nation on 13 May 2020, themed on making India self- reliant (Aatma Nirbhar Bharat), laid down a robust framework for undertaking immediate reforms and at the same time, planning for long-term development. As part of Aatma Nirbhar Bharat, a special economic stimulus package of about US$ 268 billion (INR 20 trillion), equivalent to 10%. of India's GDP, has been announced to mitigate the devastating social and economic impact of COVID-19 . lockdown. The movement also calls for undertaking bold reforms across sectors to drive the country's push toward self-reliance. The Hon'ble Finance Minister Nirmala Sitharaman has Adil Zaidi already announced a set of relief measures related to Partner MSMEs, migrant workers, street vendors, small farmers, Economic Development NBFCs and real estate sector, among others.

4 These Advisory (EDA) Leader, measures, while providing impetus to all sectors of the EY LLP Indian economy, will not only help businesses that have been forced to the brink of bankruptcy, but also migrant workers that the economy is seeing mass exodus of. From a long-term perspective, it is important that we review our pre-COVID outbreak plans and work toward a New Normal.. We hope that this report will greatly add to the intellectual vigor of dealing with the pandemic in a systematic and sustainable way. 1. Managing the impact of COVID-19 on India's supply chains Now, Next and Beyond Viewpoint Countries across the globe are grappling to counter the threatening impact of the pandemic. As countries continue to be in complete or partial lockdowns to contain the spread of coronavirus, the associated economic challenges have been exacerbated due to the global interconnectedness of supply chains, bringing many economies to a complete halt.

5 Over the past few decades, firms have optimized their value chains through offshoring and consolidating their manufacturing bases in low cost economies. However, with the prolonging of the pandemic, both regional and global value chains stand fractured and there is a pressing need to re- evaluate and re-engineer globally integrated supply chains. As companies look to diversify their supply chain risks, India has an exclusive opportunity to emerge as the preferred destination for global companies. Recognizing this opportunity, the Hon'ble Prime Minister of India, in his address to the nation on 12 May 2020, laid-out his vision of an Aatma Nirbhar Bharat' (Self-reliant India) and outlined economy, infrastructure, system, demography and demand as the five pillars. With a renewed impetus on Make in India and Deepak Bagla making India a preferred destination for global investments, Managing Director & CEO, India today is going through an unprecedented transformation.

6 Invest India Invest India, as India's national investment promotion and facilitation agency, has been working on sector-specific investor targeting and development of new partnerships to enable sustainable investments in the country. EY has been Invest India's knowledge partner for over four years, helping us in creating targeted solutions to make India a fertile ground for investments as well as in effectively undertaking urgent programs such the Business Immunity Platform' during the COVID-19 pandemic. EY has been working with Invest India on several initiatives. I. believe that EY's initiative to launch this report wherein their team of experts has undertaken an in-depth analysis of the COVID-induced disruptions in the global and domestic value chains, and suggested thought-through areas of interventions to mitigate the potential supply chain risks to catapult the Indian economy back on the growth path is well timed.

7 I wish EY the very best for this report and in its endeavors for creating sustainable solutions for the business world in the post-COVID times. As companies look to diversify their supply chain risks, India has an exclusive opportunity to emerge as the preferred destination for global companies. 2. Managing the impact of COVID-19 on India's supply chains Now, Next and Beyond Table of contents Preface .. 5. Objective of the report .. 6. Approach and methodology .. 6. Executive summary .. 7. The COVID-19 pandemic .. 14. About the Notified Disaster' .. 15. The Indian COVID-19 story .. 16. Opportunities emerging from COVID-19 chaos .. 19. Rejig in global value chains: Make in India' can shine .. 20. Analysis of sectoral value chains .. 21. A. Auto, Auto Components and Electric Mobility .. 22. Sector overview.

8 22. impact of COVID-19 .. 23. Interventions .. 24. B. Electronics Manufacturing .. 30. Sectoral overview .. 30. impact of COVID-19 .. 31. Interventions .. 33. C. Food Processing .. 39. Sector overview .. 39. impact of COVID-19 .. 42. Interventions .. 43. D. Gems and Jewelry .. 46. Sector overview .. 46. impact of COVID-19 .. 48. Interventions .. 49. E. Information Technology and ITeS .. 51. Sector overview .. 51. impact of COVID-19 .. 54. Interventions .. 55. F. Leather .. 58. Sector overview .. 58. impact of COVID-19 .. 59. Interventions .. 60. G. Medical Devices and Equipment .. 63. Sector overview .. 63. impact of COVID-19 .. 65. Interventions .. 66. 3. Managing the impact of COVID-19 on India's supply chains Now, Next and Beyond H. Metals Steel and Aluminum .. 69. Sector overview - 69. impact of COVID-19 .

9 70. Sector overview - Aluminum .. 72. impact of COVID-19 .. 74. Interventions .. 76. I. Minerals Coal, Bauxite and Iron Ore .. 80. Sector overview - 80. Interventions .. 81. Sector overview - Bauxite .. 83. Interventions .. 84. Sector overview - Iron Ore .. 85. Interventions .. 86. J. 87. Sector overview .. 87. impact of COVID-19 .. 89. Interventions .. 90. K. Plastic and Packaging .. 94. Sector overview .. 94. impact of COVID-19 .. 97. Interventions .. 98. L. Real Estate and Construction .. 99. Sector overview .. 99. impact of COVID-19 .. 100. Interventions .. 101. M. Retail and 105. Sector overview .. 105. impact of COVID-19 .. 106. Interventions .. 107. N. Textile and Apparel .. 110. Sector overview .. 110. impact of 112. Interventions .. 113. O. Tourism and Hospitality .. 116. Sector overview.

10 116. impact of COVID-19 .. 117. Interventions .. 119. Adapting to the New Normal .. 124. Areas of interventions .. 126. Policy and strategic interventions .. 126. Way forward .. 127. Industry continuity planning .. 127. Abbreviations .. 128. Special 130. 4. Managing the impact of COVID-19 on India's supply chains Now, Next and Beyond Preface 5. Managing the impact of COVID-19 on India's supply chains Now, Next and Beyond Objective of the report With the newly defined objectives of global companies and countries to reduce their supply chain risks in the long-term and fix the broken value chains in the short-term, India has an exclusive opportunity to emerge as the preferred destination during and after the COVID-19 pandemic. With its strong macro-economic fundamentals, favorable demographic dividend, improved ease of doing business, and an economy expected to grow, albeit at a lower rate during this period, India can position itself as an attractive investment destination for investors across the globe.