ABSTRACT

The whole world is going through a tough time. A huge disaster

virus named covid-19 has pulled the whole world into its
control and due to this virus, the world economy and people's
life have been disordered. India is a developing nation, and the
position of India’s small businesses is largest in the world after
China. The purpose of this research paper is to study that how
covid-19 will impact on Indian small business sector. Small
businesses are an acknowledged proving grouped for a spirited
source of innovation and competition, entrepreneurs and a
crucial source of employment. In India there are almost 42.50
million small business units which are life blood of Indian
economy. We have also tried to explain
what will be the betterment master plan of Indian small
business sector after the end of epidemic period and expected
changes in business operation. After studying the disastrous
impact and many betterment strategies, we found that
business operations of Indian small businesses, will be totally
changed.
According to a survey due to the impact of covid-19 pandemic a
whopping 60 percent closed businesses
won’t be reopening.
Keywords: Covid-19, Coronavirus Pandemic, impact, small businesses
 . INTRODUCTION
➢ Corona virus is one of the huge disasters in the world. Let us first
talk about what the corona virus is ?

➢ Corona virus was first announced in Wuhan, China in the month

of December 2019. Pneumonia of unrevealed cause was found
with total number of 44 people affected. WHO declared a name
for the new corona virus disease Covid-19 and officially named
was Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-
Cov.2). Corona virus is a virus of flu viruses background. WHO has
been evaluated repeatedly and concerned by the volume of
spread and seriousness and by the level of inaction and eventually
WHO Announcing COVID-19 is a pandemic

➢ . The virus has spread to every continent except Antarctica.

➢ The pandemic is going like a wave. Almost every country in the

world focuses on social distancing to control spreading the virus.
It is the biggest challenge we have faced since the Second World
War. The covid-19 virus spread primarily through droplets release
from nose when a person sneezes or coughs.

➢ Until December 2020 1st week over 61.8 million reported cases
and 1.4 million deaths globally since the start of the pandemic.
II. REVIEW LITERATURE

Most multilateral agencies and credit rating agencies have therefore

revised their 2020 and 2021 growth projections for India keeping in
view the negative impact of coronavirus-induced travel restrictions,
supply chain disruptions, subdued consumption, and investment levels
on the growth of both Business and the Indian economy.

Fitch Ratings - Fitch has also cut its forecast for India’s economic growth
to 4.9% for 2019-20 from 5.1% projected earlier.

Moody - Moody's Investors Service has revised down its growth

forecast for India to 5.3% for 2020 from its earlier estimate of 5.4%
made in February.

S&P Global Ratings – S&P has lowered India's economic growth forecast
to 5.2% for 2020 as against 5.7% projected earlier.

Barclays – Barclays has lowered India's economic growth forecast to

5.6% for 2020 as against 6.5% projected earlier.

The trade impact of the corona virus epidemic for India is estimated to
be about 348 million dollars in Economy and around 150 million dollars
and the country figures

II. RESEARCH METHODOLOGY

This study is descriptive in character. In this study secondary data is

used for the analysis of the small business sector. The secondary data is
collected from various websites, magazines blogs and newspapers.

The geographical scope of the study is India.

 Impact on Small Businesses:
Needless to express, covid-19 has generated a significant impact for
small businesses across India.

Small businesses form the backbone of India’s still developing

economy.

The United States, Japan and Europe are finding their feet and China
has come enormous back from the ruin of covid-19.

But the hundreds of millions of shopkeepers and laborers who keep

India’s economy running still can’t occur relief.

The new figures strongly established India’s position among the world’s
worst performing great economies, despite expansive government
spending designed to save the thousands of small businesses seriously
battered by its long, quickly imposed lockdown.

The Indian government has committed $50 billion, about 2 percent of

India’s annual economic yield, to help small businesses, as well as
money transfers to low-income workers as part of a $ 266 billion
economic package.

For the average Indian worker and entrepreneur, it hasn’t been

enough.

Covid-19 has begin, “Atmanirbhar Bharat”, Labor Codes”, “One Nation,

One Ration Card”, “New Educational Policy 2020”, New MSME
policies, and so much more.
 All the above have been greatly re-built the faith of Indian businesses,
laborers, and society at large. Doubtlessly, with Atmanirbhar Bharat,
and new MSME policies, the Indian manufacturing sector has been
given a push.

Because of the covid-19 impact, e-commerce is on the rise. Clothing

and accessories store owners are focusing on online trade because
stores and shopping malls are closed.

Also, online video streaming services are booming, and the best variety
of video streaming Netflix-like apps are sure to hit the market.

We can say that the healthcare industry, pharmaceutical industry,

essential commodities industry and online education industry are doing
well.

India is the third most affected country because of covid-19.

The industries which has been clearly affected are construction,

utilities, finance, real estate, mining and quarrying, transportation and
hotel and others. Both imports and exports fell.

Restaurant businesses are actually among the most strangle affected.

Distribution of Enterprises Category Wise:

Numbers in lakh

Sector Micro Small MEDIUM Total

Rural 324.09 0.78 0.01 324.88
Urban 306.43 2.53 0.04 309.00
All 630.52 3.31 0.05 633.88
The above table shows that in micro sector 630.52 lakh enterprises
consider for more than 99 percent of the total estimated number of
MSMEs.

In small sectors with 3.31 lakh and in the medium sector with 0.05 lakh
enterprises considers for 0.52% and 0.01% of total estimated MSMEs.

Out of 3.31 lakh small enterprises 0.78 lakh enterprises in rural areas
and 2.53 enterprises in urban areas.

Percentage Distribution of Enterprises Owned by Male/Female Owners

Category Male Female All

Micro 79.56 20.44 100
Small 94.74 5.26 100
Medium 97.33 2.67 100

Above Table shows that there is dominance of male entrepreneurs in

all sectors rather than female owners.
A survey by FICCI (2020) found that most industry respondents did not
foresee positive demand account during the entire fiscal year. Demand
side impact on corporate world, tourism, hospitality, and aviation is
among the worst affected sectors that are facing the maximum brunt of
the present crisis.

CII identifies some policy / regulatory measures, which would help ease
doing business in the wake of the outbreak of the COVID-19 pandemic
and minimize the adverse effects on the health of the industry and
economy.

1. Enhance Validity of licenses / approvals / NoCs

2. Easy & quick disbursal of pending dues

3. Provide speedy clearances

4. Relaxation / dispensation of labour law compliances

5. Contribution to PF & ESI funds

6. Facilitate ease of doing business for MSMEs

7. Facilitate trading across borders

8. Ease licensing requirement for production of Sanitizer

The COVID-19 pandemic has exposed great flaws in the current

business models. The theory of business enables organizations to
rethink their three elemental assumptions when the business
environment becomes chaotic., the global COVID-19 pandemic is a
passive entity because organizations have no influence on its
appearance or spread;nevertheless, they must act accordingly and
rethink (or rebuild) their business models.
 Objective
[Link] understand impact of Covid-19 on overall Indian Business

2. To understand impact of Covid-19 on different sectors

3. To find out the challenges for different sectors in Indian Business.

4. The objective of this study is to understand the opinion from the

business fraternity regarding the downside risks to the Indian Business
model on the backdrop of outbreak and spreading of this virus.

[Link] study also reveals that distributors are struggling to operate their
businesses due to low sales volume, and that some of them have either
shut down their operations or are in the process of shutting down.

6. The objective of this study explores the impacts of the COVID-19

pandemic, as well as strategies for dealing with those impacts, in the
corporate industry in India.
Data analysis &result: -

1: - We can see that both the genders are involved in business.

2: - Lots of industry in India

3: - How business get affected by COVID-19

4: - How COVID-19 impact the business

CHALLENGES THAT SMALL BUSINESSES FACE FOR SCALING UP DURING

THE PANDEMIC ERA

The findings on the current survey are below:

• Around 42% of surveyed businesses cited market

access as one of the biggest challenges followed

by Improving Productivity (37%) and Access to

Credit (34%)

• 31% of the respondents from manufacturing

industry cited issues related to compliance

and around 30% of the respondents from services

industry stated unfavorable domestic

market conditions

• More than 70% of Small Businesses did not have disaster recovery
framework in place when Covid-19 struck

• The three topmost challenges that might impede Small Businesses to

scale up are Market Access (42%), Improving the Overall Productivity
(37%) and Having Access to More Finance (34%)

• Three most important support measures that Small Businesses need

to revive their businesses are Better Credit Facility (59%), Better
Marketing Support (48%) and Adoption of Technology (35%)
 ➢ INTERVENTIONS THAT SMALL BUSINESSES NEED TO SCALE UP
THEIR OPERATION

• It is important that Small Businesses be given

support in areas that they perceive to be most

important to scale up their business from the

depth of the crisis caused by the pandemic

• The three topmost important support measures

that Small Businesses need to revive their

business are Better Credit Facility (59%), Better

Marketing Support (48%) and Adoption of Technology (35%)

• At sectoral level, around 77% of Small Businesses

in the manufacturing sector cited the need for

credit facility against 52% in services sector

• Only 30% cited access to skilled manpower

SOURCES OF FINANCING BY SMALL BUSINESSES

• found that around 50% of surveyed companies use other bank loans
(like unsecured loan, working capital, etc.) to fund their businesses.
37% use secure bank loans, while a good 30% seek finances through
government schemes. Interestingly, for both manufacturing and the
services sector, the sources of funds are almost same

• Notably, the survey also reveals that only 23% of

Small Businesses reach out to NBFCs for funding

• Only 11% of Small Businesses source their

financial requirements from digital lenders,

suggesting digital lenders/fintechs are yet to

make in-roads in the Small Businesses lending market

THE IMPORTANT CHALLENGES THAT SMALL BUSINESSES FACE TO
ACCESS FINANCE

• 35% of Small Businesses stated ‘emphasis on

credit scores’ by lenders as their top funding

challenge

• For Small Businesses in the manufacturing sector,

40% cited emphasis on credit scores was a key

challenge to access finance, followed by

Uncertainty in Cash Flows (35%) and Collateral

Requirements (32%)

• While for Small Businesses in the services sector,

emphasis on credit score was the third biggest

challenge

• Interestingly, as against the prevailing notions,

factors like Lack of Credit Information (20%) and

Cumbersome Disbursement Process (19%) are

not significant impediments to access to finance

THIRD PARTY VALIDATION OF CAPABILITY AND CREDITWORTHINESS OF

SMALLBUSINESS

• The survey found that 50% of the respondents

believe that a credit score by a third party

on their creditworthiness and capabilities

will help them access credit. As per the survey,

manufacturing sector (55%) expressed greater

need for third party products than the

services sector (46%)

A. MARKETING AND SALES INTELLIGENCE TOOL

• Around 40% of surveyed companies are using

marketing/sales intelligence tools for

prospecting

• Around 50% of Small Businesses, who are

currently not using marketing/sales intelligence

tools, have cited to use in near future. From the

list of companies who are planning to use tools in

the near future, 55% belong to the

manufacturing sector and remaining 45% are from

the services sector

B. EASE OF MARKET ACCESS FOR DOMESTIC AND GLOBAL MARKET

• More than 30% of Small Businesses find access to

global markets challenging, whereas, only

around 13% find access to domestic markets

difficult

• On sectoral fronts, interestingly, from the total

companies who find global access to be difficult,

more than 68% belong to the services sector

C. CONNECT WITH THIRD PARTY TO GET SUPPORT TO ENTER GLOBAL
MARKETS

• More than 70% of Small Businesses surveyed do

not connect with third parties to get support to

enter global markets

• Difficulty to access global markets and business

focus only on domestic market has been the

primary reason for not connecting with third

parties to access global markets

• On the other hand, Small Businesses who

connect with third parties for entering global

markets have cited various reasons, ranging from

business development to help customers acquisition to expanding

businesses
 ROLE OF DIGITALIZATION DURING COVID-19

Digitization has proved critical to ensuring continuity of essential

services and to reach out to customers and conduct businesses, during
the pandemic

The pandemic has accelerated the pace of digitization by several years

across the globe. The average share of products and/or services that
are partially or fully digitized have doubled or tripled in various regions
of the world
DIGITIZATION OF DAILY OPERATIONS DURING THE PANDEMIC

• Around 82% of Small Businesses surveyed have digitized their daily

operations during the pandemic. Interestingly, almost equal numbers of
companies from both services and manufacturing sector have adopted
digitization

DIGITIZATION HAS HELPED SMALL BUSINESSES TO SOLVE THEIR

TRADITIONAL ISSUES IN THE POST PANDEMIC PERIOD

• Digitization is expected to not only help Small

Businesses to gain various advantages but

also help them to address some of the foremost

traditional problems faced over the years

• Surveyed companies consider that Focus on

Customer Base (62%) and Data Security (43%) are

the top two longstanding issues that can be

addressed through digitization followed by

Evolution of Products and Services (40%),

Logistics and Supply Chain (39%) and Technology

Decisions (36%)

• Customer centricity will lead to higher customer

satisfaction which in turn will lead to higher

retention thereby increasing business

performance. This statement resonated with the findings of the survey.
Equal responses from both the sectors, services and manufacturing,
have cited digitization has helped them to focus on customers

• The pandemic has disrupted the supply chain across

countries, industries and companies. In the era of the “next normal”,

digitizing the supply chain is of paramount importance. In the current

survey, more than 50% of companies in the manufacturing sector

considered that digitization will be able to solve their logistics and

supply chain issues

BENEFITS DERIVED BY SMALL BUSINESSES THROUGH DIGITIZATION

• While the benefits derived by Small Businesses

from adopting digitization has been many, the

top two benefits have been ‘reducing cost’ and

‘Enhancing competitiveness’

• Around 52% of surveyed Small Businesses have

cited reduction in cost as one of the top benefits

derived through digitization. More than 50%

of Small Businesses cited enhanced competitiveness as another benefit

• Around 45% of Small Businesses cited better

understanding of customer behavior as another benefit

FUTURE PLANS OF SMALL BUSINESSES REGARDING THE ADOPTION OF
NEXT-GEN TECHNOLOGIES

• During mid-18th century, India played a pivotal role

in the global economy. There were six significant

economies at that time that were considered as

India’s peers: Germany, France, United States,

Great Britain, Japan and China. Two among these –

Great Britain and France – were ahead of India in

terms of real gross domestic product (GDP) per

capita. India slipped from third to the fourth Position

globally during the industry 1.0 and further

slipped to sixth position during Industry 2.0. After

Industry 3.0, India’s rank hit the bottom.

• We are now at the threshold of Industry 4.0, which

is being driven by Artificial Intelligence (AI), the

Internet of Things (IoT), Cloud Computing, 3D

Printing, Robotics, and other similar technologies.

This is the first industrial revolution that has been

anticipated and the first one for which mankind has

been able to plan

• Around 43% of Small Businesses from the

services sector cited that digitization would help

them to address their data security issues, whereas for the

manufacturing sector, that number was 33%

• The pandemic has quickened the progress towards

Industry 4.0 across many economies and India is

one of them. Various research presented that there

are various reasons cited by Small Businesses for

adopting Industry 4.0, but businesses are gradually

understanding the need and benefit of adopting Industry 4.0

Pandemic disrupts trade flows

The COVID-19 pandemic hit at a time when trade was

already in turmoil, with world trade declining in all quarters

of 2019 compared with a year earlier. That drop was

partially linked to several trade disputes, including

those between the United States and China

Merchandise trade drops sharply in 2020

The decline accelerated sharply with the advent of the

pandemic, which caused exports from China to drop

steeply in the first few months of 2020. According to

monthly data, 1 Chinese exports to selected countries were

21% lower in February 2020 than in February 2019

As a result, Chinese exports declined in value

to the lowest level since August 2009, during 2008

financial crisis. 3 In March 2020, Chinese exports recovered

slightly, they remained 10% below their March 2019 level

As the COVID-19 pandemic hit other countries and regions

later than China, monthly data available at the time of

publication only reflects the beginning of their decline in

exports. March exports from the European Union (EU)

countries and the United States dropped by 8% and 7%

from a year earlier, respectively. Other countries’ exports

decreased by 4% in the same month.

Strong impact on textiles and vehicles

Some EU countries and the United States implemented

lockdowns during March 2020, while most of China did not

return to business until late March. Sectoral data for China,

the EU and United States, also known as G3 economies,

suggest that the pandemic, and the measures taken to

contain it, had the most impact on trade in skins and leather

products, footwear, vehicles and clothing, with declines of

20% or more in exports of such goods

Travel and tourism at stake

In addition to provoking a decline in merchandise trade,

the pandemic crisis has hit services heavily, with travel and

tourism among the most affected sectors. During the

period from the onset of the pandemic to 7 May 2020,

113 countries imposed global travel bans.

The World Tourism Organization estimates international

tourist arrivals could decline by 60%-80% in 2020 from a

year earlier – a reduction 15 to 20 times greater than

during the 2008 global financial crisis

Supply chains transmit effects of shutdowns globally

China, the European Union and the United States are not

only among the world’s largest exporters, they are also key

players within global supply chains. This makes them major

importers of raw materials, parts and components. As a

result, in addition to the impact at home, lockdowns in the

G3 economies affect businesses in partner economies and

in countries that do not have a direct trading relationship

with China, the EU or the United States. The complexity of

global supply chains mean lockdowns in one economy

can have major ripple effects across the globe

Ensuring access to essential goods

COVID-19 has given governments around the globe the

challenge of directing essential goods, such as food and

medical equipment, where they are most needed to

address the immediate health crisis. High demand for

certain sanitary products, supply chain disruptions and

logistical constraints made this difficult. Fearful that them

populations would be unable to obtain goods needed to

cope with the immediate health crisis, many government

Many of the temporary measures applied in response to

The pandemic curbed the exchange of goods and services.

Indeed, export bans and other restrictions covered 73% of

worldwide trade in virus-related products as of early May

2020. However, 46% of the new measures aimed to

liberalize trade – notably, easing import conditions for

critical items needed to address the pandemic.

While the discussion on reducing the economy

consequences of the COVID-19 pandemic response often

focuses on macroeconomics, a decades-old observation

by renowned economist Paul Krugman comes to mind:

‘Countries do not buy or sell goods overseas, companies

do.’ 34 The pandemic-induced slowdown first and foremost

affects the real economy, made up of businesses and the

people who work for them. SMEs elsewhere in the world that supply

affected countries have seen their orders reduced as

demand declined.
Four phases of pandemic impact

As small businesses face the COVID-19 crisis, they travel

through four phases, whether in succession or

simultaneously. From shutdown to supply chain impacts

and depressed demand, the cycle eventually moves to the

recovery phase

1. Shutdown impacts have affected countries and

regions where the pandemic led governments to adopt

measures shutting down economic activity. Such

containment efforts have hit hardest in tourism, travel,

wholesale and retail, hospitality and entertainment. In the

short run, governments in affected countries have focused

on keeping SMEs in these sectors afloat.

2. Supply chain disruptions have affected companies

around the world. The pandemic-induced lockdowns in

China, the European Union (EU) and United States, also

known as the group of three (G3), have had major impacts

on production, imports and exports. Halts in production in

effected economies reduced the inputs available for global

supply chains.
3. Demand depression has occurred first in pandemic-

affected countries, where confinement reduced sales to

consumers and businesses. But even when the health

emergencies begin to ease, business investment can

remain low due to run-down savings. Households may

reduce spending in the medium to long term to

compensate for lower incomes during the pandemic

period. Confidence might be low, credit overstretched, and

bankruptcies among SMEs may follow.

4. Recovery has begun gradually in instances were

containment measures have been eased. The evolution of

business recovery in each country depends on how the

health situation evolves and, on the depth, and timing of the

original suppression of demand. In the weeks after

lockdowns cease, economic activity is likely to rebound

sharply as people go back to buying products they have

missed from their favorite small businesses. Manufacturing and

agricultural businesses may have higher sales as inventories are

restocked and consumers make postponed purchases

Large impact on small businesses
The majority (55%) of business responded to the survey

said they had been strongly affected by the pandemic and

measures taken to contain it. Smaller companies

tended to be more strongly affected by COVID-19 than

larger ones.

Nearly two-thirds of micro and small firms said their business

operations were strongly affected by the crisis, compared with about

40% for large companies.

The crisis has had a severe impact on firms in Africa, with

two companies out of three reporting that they were

strongly affected by COVID-19, mostly through reduced

sales (75%) and/or difficulty in accessing inputs (54%)

Different genders, different impacts

While all firms are affected by the crisis, male and female

entrepreneurs differ in their sector of operation, type of

businesses and business strategies. As a result, the

pandemic has generated a different pattern of impact on

men and women-led enterprises. A higher proportion of

women-led firms are in the three sectors that reported

being most affected by the pandemic, with the largest

presence in accommodation and food and retail and

wholesale
Moreover, the pandemic’s heavy impact on informal

companies is of concern because of the key role they play

in local economies and global supply chains. In the

Philippines, for example, informal businesses provide

crucial economic services such as food selling,

transportation, childcare and healthcare.

How are governments trying to protect small businesses?
Most governments have taken steps to tackle the

consequences of COVID-19 on both human health and the

economy. The magnitude of responses – including health

measures and economic stimulus packages – have varied

considerably, however, from almost nothing to about half

of gross domestic products.

The level of support offered to firms depends on various

factors, with GDP per capita being a key determinant.

The higher the GDP per person, the higher the level of

measures as a percentage of GDP. Simply put, small businesses in

wealthier countries get more support from the government than small

businesses in poorer countries.

Companies want specific kinds of government support

Media around the world have heralded the need to support

small businesses. When these firms were asked about

their needs in a survey, however, it became clear that they

prefer certain types of support.

Companies that responded to the ITC COVID-19 business

survey said that tax waivers, temporary tax relief and

financial programmed would be the most helpful

government measures. This confirms the liquidity crisis accompanying

the health crisis.

Targeted policies to help trade flow

Policymakers have taken many targeted actions to

safeguard export-oriented businesses. This has been done

for several reasons. Exports must be prioritized to meet the

need for foreign currency to pay for essential imports.

Furthermore, many export industries have been built up

over decades, and countries want to retain their foothold in

international markets.

Trade finance can help cash-strapped small businesses

keep their export clients, and is particularly relevant for

firms that export to compensate for lower local demand.

For example, the Export Credit Bank of Turkey extended its

credit repayment periods by two to six months and

stretched its rediscount credit terms to two years.

Trying to reach informal businesses

Informal businesses have been excluded from most

COVID-19 support programmed because they are not

registered with their governments. It is admittedly difficult

to reach them with support. By virtue of their importance

for jobs, poverty reduction, the economy and exports,

However, they are vital to a post-pandemic world. That

means tailored efforts to support them must be made.

Several governments have taken steps aimed specifically

at the informal sector, to reduce their costs during the

pandemic. For example, Burkina Faso suspended fees

charged to informal sector operators for rent, security and

parking in urban markets. A few countries are trying to

extend concessional financing available to firms in the formal

sector to companies that are informal. For instance, Mauritius

has deferred interest payments for informal-sector SMEs.

Business approaches to COVID-19: Retreat, resilience, agility

In the first days of the pandemic, small and medium-sized

enterprises around the world responded in similar ways. They

took safety measures to protect employees and customers

against infection, and informed customers whether the

business was going to shut down temporarily. Many

companies also reached out for support from the government,

Industry groups and other business networks support.

Retreat

Retreating responses to the crises undermine the long-

term competitiveness of the company. Taken up after a

shock has hit and without any advance planning, such a

strategy can, for example, entail the distress sales of

assets to pay for rent during a pandemic shutdown or for

emergency repairs to the business premises after a storm

Resilience

On the other hand, pro-competitive approaches build the

adaptive capacity of the business every time a shock hits,

as employees learn how to adjust and start to take

advantage of each new round of change. Resilient and

agile approaches maintain competitiveness by ensuring

that a business can weather the storm in as good shape

as before, or even stronger.

Agility

An even more constructive reaction to risk is to take

advantage of it. Agile firms change form in response to the

current situation, however new it is. 43 This may include

customizing or proposing new products or business

models according to new market trends

 PREPARING FOR THE “NEW NORMAL”

With COVID-19-induced shutdowns being gradually lifted

around the world, business owners and policymakers alike

are shifting their focus towards the post-pandemic world.

Enhanced sanitary protocols and other containment

measures are likely to remain in place for some time while

efforts to create a COVID-19 vaccine continue in earnest. 45

Meanwhile, discussions are growing on how to prepare for

the ‘new normal’.

Many would like nothing better than to go back to how

things used to be – a favorite restaurant, traditional

suppliers, a shake of the hand. The distancing protocols

that businesses face suggests a new reality. The pandemic

has provided a shock that is encouraging a rethinking of

established systems. There are many reasons to believe

that economies will not revert to a pre-crisis state of affairs

once the pandemic has been overcome. Strong sanitary measures may

persist, for example, to prevent future pandemic outbreaks. The trend

towards digitalization will expand.

Four main characteristics of the ‘New normal’

Contagion of the COVID-19 virus, and the economic

impacts of its containment, are leading many to rethink

established systems and priorities. There were already

calls to reshape globalization before the pandemic,

for example, to strengthen financial regulation following

the 2008–09 financial crisis and to act to reduce inequality

within and between countries

Post-pandemic reconstruction provides a window of

opportunity to address problems in global governance.

This includes making the world more resilient to global

crises.

Some expect the pandemic to be a paradigm-changing

event, like how WWI and WWII, the oil price shock of

the 1970s and recession of 2009 led to new international

regimes or significant social, policy and economic change

As small and medium-sized enterprises play

a major role in most economies, they need to be involved

in building this new reality.

Resilience

As countries focused on shoring up their SMEs when

COVID-19 began to spread, they learned a key lesson:

the importance of fostering business resilience in good

times, as it can strengthen the ability of firms to ride out

crises, reduce the likelihood of bankruptcy and improve

the state of the economy.

Today’s economies are made up of thousands of small

businesses. As employers and generators of value, they

are the lynchpins that tie together modern-day capitalism.

Digital

Digital technologies were ascendant before the pandemic

hit, and during lockdowns whole parts of the economy

shifted onto digital platforms. Teleworking, remote learning,

teleconferencing, online health services, e-commerce and

digital payments all kept the world going in the first half of

2020 in many places

Inclusive

As is often the case with crises, COVID-19 has put the

spotlight on those who are economically disadvantaged,

such as informal sector workers, migrants and people in

SMEs. Many have been deprived of even subsistence level

income during economic lockdowns and have faced health

and sanitary crises. This underscores the fact that lack of

basic social security benefits pose a risk for vulnerable

individuals and society. The same has been

seen in developed countries around the gig economy.

Sustainable

Although the focus is likely to be on sustaining people’s

health as the pandemic recedes, environmental concerns

will also be high on the agenda, especially as evidence

suggests that the next crisis may be on that front. Indeed,

climate change was ranked as the top global business risk

in a 2019 survey of insurance industry experts. 59 The strong

likelihood and impact of climate-related risks have ranked

them highest in the World Economic Forum’s Global Risks

Report
Furthermore, the COVID-19 crisis has sparked interest in

reducing costs and increasing productivity in many

businesses. They should consider improving resource

efficiency by frontloading investments in energy efficiency

and renewable energy, and adopting circular economy

principles.
Trade governance for the new normal

Small businesses are reopening onto a world that has

been reshaped by the COVID-19 pandemic. They are

facing new sanitary protocols, their buyers are looking to

diversify sources of input and it has become urgent to

adopt digital technologies. There are opportunities to

thrive, but there is also a risk that SMEs could be unable

to cope. Reconstruction is an opportunity to rebuild the

connections between these businesses and the world

around them. Indeed, it could be crucial to their capacity

to thrive in a post-pandemic business environment.

Supply chain governance for resilience

COVID-19 has sharply disrupted supply chains, and

stakeholders have expressed concerns about the long-

term implications of this upheaval. The pandemic’s impact

has spurred discussion on how to make supply chains

more resilient, with proposed solutions including

comprehensive supply chain risk management and

diversification of end markets and input source.

All supply chain actors have a role to play in building

resilient and responsible supply chains – from the

governments that regulate them 64 to the consumers

choosing which brand to buy. 65 However, lead firms often

have a significant role in directing supply chains, making

decisions regarding production practices, branding,

sourcing and sales. In many cases, lead firms have passed the risk

burden along the supply chain to vulnerable small businesses in

developing countries Lead firms should redesign their approach to

collaboration and costing with SME suppliers to ensure more equally

shared value. The mutual trust that results encourage

sharing of information and collective action to withstand

[Link] ‘social capital’ in the supply chain can be

crucial to transmitting information and funds as necessary

and to respond to crises. The way that the supply chain

is managed and developed over time can foster an agile

work culture that improves the capacity to adapt. such an approach

implies embracing rather than rejecting supply chains, and

acknowledging
Standards and regulations for the new normal

As cross-border business recovers, including in travel and

tourism is likely to be increasingly governed by new sets

of standards and regulations falling into two categories. 70

First, those that help enterprises meet new markets

requirements. This includes management system

standards on quality, food safety, occupational health

and safety, social accountability and specific products standards.

Second, those concerning security, resilience and risk

management. This includes business continuity

management, emergency management, crisis

management and supply chain security.

National standards bodies need to engage the private

sector actively to provide solutions, support and advice

on relevant standards available to small businesses.

In addition, international organizations can partner with

business support organizations to provide technical

assistance to small businesses, such as training and

advisory services to implement new standards

Micro, small and medium-sized enterprises

An internationally harmonized definition of micro, small and

medium-sized enterprises does not exist. For feasibility and

comparability reasons, this report classifies companies based

on the number of full-time employees:

➢ Micro: up to 4 employees
➢ Small: 5 to 19 employees
➢ Medium: 20 to 99 employees
➢ Large: 100 or more employees
ITC COVID-19 Business Impact Survey

On 21 April 2020 the International Trade Centre (ITC) launched a

worldwide online survey to assess the economic impact of the
coronavirus pandemic on global businesses. The analysis of this
report is based on data collected between 21 April and 2 June
2020. However, data collection is still ongoing and subsequent
analysis of the ITC COVID-19 Business Impact Survey might not
match with data in this report.

The ITC COVID-19 Business Impact Survey collected data on

4467 companies in 132 countries. The sample was spread
across different regions (Africa, Americas, Asia, Europe and
Oceania), sectors (primary, manufacturing and services) and
size (micro, small, medium and large) and it included both
exporting and non-exporting firms.

Trade values, export potential and trade policy

Values for monthly and yearly merchandise trade, estimates of

export potential and trade policies enacted in response to
COVID-19 are sourced from ITC Market Analysis Tools
accessible online, and reflect the data available as of 17 May
2020. Monthly data covers January, February and March 2020,
except for China where the analysis is based on the data of the
first quarter 2020
Supply chain trade
International supply chain trade is defined as the flow of inputs
(expressed in US dollars, in gross terms) used in production
located in at least two countries, with produced goods
consumed in a third country.