COVID-19: Capitalize on businesses shifting from China to boost state's economic status, says Assam panel

Assam government should plan to capitalise on manufacturers' objective to shift out of China in order to invite investment as the state's economy has taken a severe hit due to the coronavirus pandemic, a panel constituted by the state government suggested.

The panel submitted a report on industry and commerce of Assam in the backdrop of COVID-19 pandemic, saying a severe economic crisis which may result in bankruptcies and higher level of unemployment was looming large in the state.

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"Manufacturing businesses, in the long run, are expected to shift out of China to India and other countries. The government should plan to capitalize on this opportunity by keeping ready the platform, policies and practices to promote and incentivize possible foreign investments in the state. In this connection, the idle assets of defunct/ stroked/ closed industrial units in the state may be surveyed to examine setting up of new industries through FDI or on PPP mode thus integrating with the larger UN Sustainable Development Goal 17," the panel suggested as one of the measures to boost industries.

It said Assam’s industries and commerce sector including MSMEs, tourism, service sector, hospitality has been hit hard by the pandemic. The situation is bleak with a virtually stagnant credit flow and complete disruption of supply chain and distribution channels.

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Stating that the MSME sector was among the most severely impacted sector, the committee suggested that a supportive economic stimulus by the government is imperative to kickstart the economy to its normal capacity.

"This can be a very pessimistic scenario with significant structural damage impacting the economy on the supply side, labor market, capital formation and productivity. This situation may prolong with an extension of current restrictions due to the continuously growing number of COVID-19 cases," it said.

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It also called for devising an export policy in the light of current shift in demand from the foreign market in the wake of COVID-19 crisis and may be integrated with the Act East Policy.

"The government must put its entire thrust on global market and provide an export-ready platform. The government should plan to capitalize on this opportunity by keeping ready the platform, policies and practices to promote and incentivize possible foreign investments in the state," it said.

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Assam industry department had recently written a letter to union commerce ministry with a request to set up industries and invite investors willing to shift their bases from China to India. Assam says its closeness with the South East Asian markets could be an advantage for such companies.