India

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Return to homepage  |  Last updated: 2 December, 2020

On 26 March: INR 1.7 trillion (~USD 22 billion) relief package announced by the Finance Minister

On 15 May: the Prime Minister of India declared a COVID relief package of INR 20 trillion (~USD 260 billion)

On 14 Nov : INR 2.65 lakh crore comprehensive stimulus package announced by the Finance Minister

Food related

• About two-thirds of population will be covered under the Pradhan Mantri Garib Kalyan Anna Yojana (Food scheme)
• Everyone under this scheme will get 5 kg of wheat and rice for free in addition to the current 5 kg allocation for the next 3 months
• In addition, 1 kg of preferred pulse (based on regional preference) will be given for free to each household under this Food scheme for the next three months. 
• This distribution will be done through Public Distribution Scheme (PDS) and can be availed in two instalments.

Direct benefit transfer related

• Farmers currently receive INR 6,000/- every year through the PM-KISAN scheme (minimum income support scheme) in three equal instalments. The government will now be giving the first instalment upfront for fiscal year starting April 2020. About 86.9 million farmers are expected to benefit from this immediately.
• MNREGA workers: Wage increase from INR 182/- to INR 202/-. Such increase will benefit 50 million families. The wage increase will amount into an additional income of INR 2,000/- per worker.
• 30 million senior citizens, widows, disabled to get one-time ex-gratia amount of INR 1,000 in two instalments over the next 3 months.
• 200 million woman Jan Dhan account holders to be given ex-gratia amount of INR 500 per month for the next 3 months, to run the affairs of their household.
• Women in 83 million families below poverty line covered under Ujwala scheme will get free LPG cylinders for 3 months. 
• For 630,000 Self-help Groups (SHGs), which help 70 million households, the government is doubling collateral-free loans to Rs 200,000.
• State governments have been directed to use the welfare fund for building and construction workers. The District Mineral Fund, worth about INR 310 billion, will be used help those who are facing economic disruption because of the lockdown.

Healthcare related

• The Finance Minister has announced medical insurance cover of Rs 5 million per healthcare worker. About 2 million health services and ancillary workers will benefit from such insurance scheme.

Organized sector related – Social security

• The Employees Provident Fund Organization (EPFO) has announced - employees who contribute to EPF can withdraw up to 75 percent of the account balance or 3 months’ basic salary and dearness allowance, which ever is lower.
• New employees under the Employees’ Provident Fund Organization (EPFO)-registered organizations will enjoy benefits, including subsidy support by way of EPF contributions. The scheme is expected to cover 65% of employees and 95% of establishments in the formal sector.
• Establishments which employ up to 100 employees and if 90 percent of whom earn up to INR 15,000 per month, the government will pay the employee provident fund contribution both of the employer and the employee (12 per cent each) for March 2020 to May 2020. This support is extended for another 3 months i.e. June to August 2020.
• Non-refundable advances may be granted  to a member of a provident fund, subject to certain conditions.
• EPFO issued the circular which states that no proceedings should be initiated on establishments covered under the EPF Act for levy of penal damages on account of any delay in the payment of any contributions or administrative charges due for any period during the lockdown.
• In view of the government’s decision declaring COVID-19 as a pandemic, the Pension Fund Regulatory and Development Authority (PFRDA) allowed partial withdrawals from the NPS to fulfill financial needs towards treatment of the COVID-19 illness of a member, his/her spouse, children (including adopted child), or dependent parents. The following documents must be provided to claim a partial withdrawal:
  • Medical certificate; and
  • Formal request for partial withdrawal

Immigration

Following categories of foreign nationals are permitted to enter India by water routes or by flights including those under the Vande Bharat Mission or ‘Air Bubble’ (Bilateral Air Travel Arrangements) Scheme or by any non-scheduled commercial flights as allowed by the Ministry of Civil Aviation:-

• All Overseas Citizen of India (OCI) cardholders and PIO cardholders holding passports of any country.
• All foreign nationals intending to visit India for any purpose(including their dependents on appropriate category of dependent visa)  except those on Tourist Visa.
  • All existing visas, except electronic visas (e-Visa), Tourist visa and Medical Visa, which remained suspended, shall stand restored with immediate effect. If the validity of such visa has expired, the foreign national may obtain a fresh visa of appropriate category/sub-category from the Indian Mission/Post concerned. In the case of Medical Visa (including visa for Medical Attendants), foreign nationals intending to visit India for medical treatment in emergencies may be granted Medical visa for appropriate period by the Indian Missions/Posts. The condition of obtaining a visa will not apply to dependent family members of foreign diplomats/officials who are eligible for visa exemption in terms of bilateral visa exemption agreements or visa   specific agreements entered into by India with various countries.
  • In case any foreign national is required to visit India urgently due to any family emergency, the Indian Missions/Posts are authorized to issue single entry X-Misc visa for appropriate period. In such cases, the Indian Missions/Posts may take a decision on grant of visa on a case to case basis on the merits of each case.
  • Nationals of Nepal and Bhutan are permitted to come to India from any country  (including any third country).
  • Any Indian national or a national of Nepal or Bhutan holding any type of valid visa of any country is permitted to travel from India to the country concerned provided there is no travel restriction for entry of Indian/Nepalese/Bhutanese nationals in that country. It would be for the airlines concerned to ensure that there is no travel restriction for Indian/Nepalese/Bhutanese nationals to enter the country concerned with the particular visa category before issue of tickets/boarding pass to the Indian/Nepalese/Bhutanese passenger.
  • There will be no restriction on incoming passenger  traffic  into India through the authorized airport/seaport Immigration Check Posts for all categories of foreign nationals who are permitted to enter India or those who may be permitted to enter India  in future. Such travel restrictions would also not apply to any movement of cargo or goods and supplies in any vehicle, aircraft, ship, train etc. along with their crew, sailor, driver, helper, cleaner etc. on any of the 107 Immigration Check Posts including the land ICPs. However, such restriction on incoming passenger traffic into India will continue to be in effect in respect of foreign nationals holding Tourist Visa.
• The Government has further extended the travel restrictions for international commercial passenger services to/from India till 31 December 2020. This restriction shall not apply to:
  • International all-cargo operations; and
  • flights specifically approved by Government i.e. Vande Bharat Mission or ‘Air Bubble’. 
• Union Ministry of Home Affairs has decided on the further relaxation of visa restrictions for more categories of foreign nationals who want to travel to India. This includes foreign nationals who are holding Journalist (J-1)  and their dependents who are holding J-1X visa are permitted to enter India.

Liquidity measures
Relief measures announced by Reserve Bank of India on 27 March 2020 & 17 April 2020:

• Reduction of policy repo rate by 75 basis points (from current 5.15% to 4.40%).
• RBI will conduct auctions of TLTRO (Targeted Long Term Repo Operations) of up to three-year tenor of appropriate sizes for a total amount up to INR 2 lakh crore (~USD 26 billion) at a floating rate, linked to policy repo rate (50% corporates, 25% for development institutions for onward lending to agri, housing and medium / small enterprises and 25% for NBFCs and MFI).
• CRR of all banks to be reduced by 100 basis points to 3% beginning March 28, for 1 year. This will release liquidity of INR 1,37,000 crore across the banking system.
• Liquidity coverage ratio for banks reduced from 100% to 80% likely to release liquidity.
• These liquidity measures will inject liquidity of INR 4.74 lakh crore (~USD 63 billion) to the system.

Relief for MSMEs

• INR3 Lakh crore (USD 39 bn) collateral free loan with 100% credit guarantee.
• INR20k crore (USD 2.6 bn) subordinate debt for stressed MSMEs.
• INR50k crore (USD 6.5 bn) equity infusion for MSMEs with growth potential and viability through Fund of Funds .
• New definition of MSMEs – investment limit revised upwards; additional criteria of turnover introduced.
• No global tenders for government contracts up to INR200 crore (USD 26 mn).
• E-market linkage to be promoted as replacement of trade fairs and exhibitions
• MSME dues to be cleared within 45 days.

Relief for NBFCs

• INR30k crore (USD 3.9 bn) liquidity infusion for NBFCs/HFCs/MFIs
• INR45k crore (USD 5.9 bn) partial credit guarantee scheme for NBFCs

Relief for Power utilities

• INR90k crore (USD 11.7 bn) liquidity infusion to DISCOMs against receivables guaranteed by State government for exclusive purpose of discharging liabilities to power generating firms.

Regulatory measures

• Moratorium period to be excluded while computing 90 Day NPA norm for asset downgrade . 
• Time period allowed under RBI framework for resolution extended by 90 days (210 + 90 days).
• Further deferring implementation of last tranche of 0.625 % of capital conservation buffer to Apr 01, 2021.

Real estate sector and EPC/Contractors:

• Extension of up to 6 months to be provided by all Central Agencies (like Railways, Ministry of Road, Transport & Highways, Central Public Works Dept, etc.).
• Government agencies to partially release guarantees, to the extent contracts are partially completed.
• Registration and completion timelines extended by upto six months for all registered real estate projects.
• Concurrent extension of various statutory compliances under RERA.

Insolvency and Bankruptcy Code (IBC):

• Threshold of default under section 4 of the IBC has been increased from Rs 100,000 to Rs 10 million with the intention to prevent triggering of insolvency proceedings against MSMEs.
• Fresh admission of Insolvency cases for default arising after 25 march 2020 under IBC, 2016 suspended for six month (extendable by another six months) in an effort to stop companies at large from being forced into insolvency proceedings in such force majeure causes of default.
• Loans for COVID-19 excluded from definition of default.
• Government to proposed new guidelines for MSME.
  

Corporate affairs:

• Applicability of CARO, 2020 has been shifted to FY21 instead of FY20. (CARO is Companies Auditors' Report Order).
• Companies Act requirement of creating deposit reserve of 20% of deposits maturing in FY21 and investing 15% of debentures maturing in FY21 before 30 April 2020 may be done before 30 Sep 2020.
• Decriminalization of certain defaults under the Companies Act 2013 and simplification of mechanism to deal with defaults.
• Lower penalties for default of small companies, one person company, producer companies and start ups.
• Companies permitted to list securities directly in foreign jurisdiction.
• Private companies who list debt securities on stock exchange not to be regarded as listed companies.

• Recovery plan : India
• Budget : 2.65 lakh crore INR
• Announcement : Nov 14th 2020
• Main orientations : Infrastructure, Healthcare, Public Private Collaboration

Self Sufficient Economy

• Production Linked Incentive (PLI) scheme worth up to Rs 1.46 lakh crore for 10 key sectors in a bid to boost India’s manufacturing capabilities and enhancing exports
• Incentives will be offered for the sectors such as white goods manufacturing, pharmaceutical, specialized steel, automobiles, telecom, textile, food products, solar photovoltaic and cell battery.
• Rs3,000 crore boost for promotion of project exports through lines of credit under the Indian Development and Economic Assistance (IDEAS) scheme
• R&D grant of Rs900 crore to the biotechnology sector for the development of Covid-19 vaccines

Planned Urbanization, Resilient Infrastructure

• Employment will also be created through the infrastructure and housing incentives and spending, including 7.8 million through the PM Awas Yojana for the rural economy.
• An additional Rs18,000 crores was announced under the Prime Minister Awaas Yojana Urban (PMAY-U) that would be provided through additional allocation and extra budgetary resources.
• Set up a Rs1.10 lakh crore platform for infra debt financing through equity infusion of Rs6,000 crore in the National Investment and Infrastructure Fund (NIIF) which will ease infra financing and trigger infrastructure development.

Employment measures

Atmanirbhar Bharat Rozgar Yojana

• New employees under the Employees’ Provident Fund Organization (EPFO)-registered organizations will enjoy benefits, including subsidy support by way of EPF contributions. The scheme is expected to cover 65% of employees and 95% of establishments in the formal sector.
• Rs10,000 crore under the Prime Minister Garib Kalyan Yojana will boost rural employment in the informal sector and encourage the growth of the rural economy

Credit Measures

• Extend the Emergency Credit Line Guarantee Scheme (ECLGS) till March 31, 2021, to provide liquidity support to the 26 stressed sectors of the economy, including healthcare, identified by the Kamath Committee by providing collateral free and 100% guaranteed loans.

Tax: Himanshu Parekh – himanshuparekh@kpmg.com
Restructuring: Manish Aggarwal – manishaggarwal@kpmg.com
Legal: Sudipta Bhattacharjee – sudiptab@advaitalegal.com / Shailendra Singh – shailendraks@advaitalegal.com