Due to the Covid-19 pandemic, the global trade took a hit as countries preferred lockdown to limit the spread of the disease. Restrictions were imposed on travel and cargo with only limited freight allowed to enter and exit the country. One of those who suffered due to the restrictions were food importers. Food importers suffered losses as their primary clientele is from the hospitality sector, which is shut for the last three months. In an email interaction with Ashwani Maindola, Amit Lohani, convener, Federation of Indian Food Importers (FIFI), explains the crisis faced by food importers and how they are dealing with it. Excerpts:
How do you assess the impact of the lockdown on food imports?
The impact has been detrimental and tremendous on food imports at various fronts:
a. Containers have been stuck in limbo as delay at ports due to labour shortage, delivery order delay from shipping lines, testing delay from food safety accredited labs, unavailability of forklifts & transport facilities.
b. HORECA represents 50% - 60% of the imports trade due to the ingredients being used by the hospitality industry. During Covid-19 sales have dropped down to zero with cash flow crunch from the players and dues over 90 days. Industry reportedly has not been paid for goods supplied since January 2020 and is stuck with a few hundred crores worth of stock lying at their warehouses, based on the forecast and contracts of the hospitality partners.
c. Travel retail has been impacted severely with unpaid stock lying at various travel retail outlets across India but no travellers to purchase these goods.
d. Traditional retail has been performing with great perseverance and paying on time but modern retail has been showing signs of weakness and payments delays have now been stretched to 120 - 150 days. The severe disruptive impact on demand caused by the pandemic has created large cash flow gaps for corporates.
e. The top commodity, which has been impacted are almonds and apples approximately to the tune of Rs 1,000 crore.
f. International F&B industry is looking at a loss of Rs 15,000 – 20,000 crore in these three months of lockdown due to expiry of products lying at warehouse, sales loss, additional cost of compliance with Covid-19 and fixed expenditure.
How do you assess the impact of interventions made by administration to minimise the pandemic impact on trade?
We have seen various positive measures by GoI to facilitate trade.
a.FSSAI, Customs and DAHD have allowed importers to submit E-Documents assisting the Ease of Doing Business,
b.FSSAI department granted interim extension to licence renewal of Food Business Operator licence. Similar auto extension from other government agencies can be a great support for the industry,
c.Customs department granted interim waiver on fine imposed on delayed BL filing otherwise,
d.Detention waiver has been granted by the Department of Shipping for lockdown 1.0 and 2.0 but not applicable for further lockdowns is negatively impacting the trade,
e.Customs has granted MSME unsecured loans, which might be a relief but awaiting the fine print.
Part of the impact on trade was also related with the GST and refund? Do you think problem was resolved or still remains unattended?
The trade has been requesting to get lower GST rates on certain trade commodities with health benefits for example like almonds, hazelnuts, walnuts, pistachios, and others. FIFI members believe that a goodwill decision by the government can help bridge health inequalities within the consumers of various social strata and also support consumption of goods with scientifically proven positive impact on the immune system of the consumer.
Recently the government announced economic package based on announcement made by the PM about Rs 20 lakh crore fiscal stimulus. What do you think, how will it impact the food trade?
The real impact of the stimulus can be really ascertained after 2-3 months as the fine print has just been released and positively impact trade. We hope that the package would bring positive consumer sentiment and increase liquidity in trade.
Further, the lockdown is now relaxed across the country and businesses are allowed to operate. What is the situation with respect to food import, what is the approach of food importers to lifting of the lockdown?
The situation is grim with created a huge logjam at various major ports of entry in the country - shipments are taking 7-10 days to reach their perspective CFS post docking. We have been hearing that all the Customs, FSSAI, posts, shipping line and transport are fully functional but, unfortunately the processes have slowed down tremendously. From an average time of 8-15 days to get the shipment out of the ports is currently taking 25 - 40 days. The cost burden of the delay is borne by the importer which is severely disruptive to his operations.
How are you maintaining the food safety of the products that are being imported in India? How much time do you think it would take to fully recover from the impact of the lockdown and the pandemic?
The food and beverage importers are adhering with the guidance issued by FSSAI and also that the business understands the sensitivity around the possible contamination. We are in full support of the ongoing efforts to contain the spread of pandemic and are taking measures like following defined health protocols, limiting to essential staff, following SOPs related to timely sanitisation not only of the facilities but, also for staff and vehicles used for transportation. These measures no doubt are an added cost burden but given that we are in extraordinary situations thus, we are taking extraordinary measures.
The Covid-19 lockdowns and related lockdown phases have hit the economy in unprecedented manners. The economic normalcy may see over a year once the lockdown ends. The new normal will, has put a grinding halt on tourism, hospitality, QSR, travel retail, and institutional sector, which have a direct impact on the international F&B sector. Needless to say that the Indian households have a reputation of being big savers and the same is being amplified in current volatile situation with reduced availability of funds, and such factors too will attribute to the impact of lockdown.