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Newsletter, U.A.E

What does the Major ESR Overhaul mean for the Organizations based out of the UAE?

September 14, 2020

2020 continues to be unpredictable with the UAE incorporating certain changes to the existing ESR (Economic Substance Regulations) policies, in a way to overhaul the existing principles associated with Economic Substance Regulations. As per the existing ESR guidelines, companies based out of the United Arab Emirates had to file reports, showcasing the legislative whereabouts, and tax-related activities.

Premise

Before we move any further, it is necessary to retrace the original guidelines issued on the 30^th of April, 2019, as a part of the Resolution 31, postulated by the Cabinet of ministers. Besides that, specific regulations by the MOF (Ministry of Finance) were also put forth on 11^th September 2019, via the Ministerial Decision no. 215. To put things in the hindsight, the existing ESR guidelines aimed at removing companies from the EU European Union) backlist and easing out the approaches for handling the Coronavirus pandemic followed by a more accommodative ESR filing deadline.

The Change

The new regulations started coming in on the 10^th of August, 2020 as a part of the Resolution 57, to replace and repeal the existing Resolution 31. Similarly, Ministerial Decision 100 also comes to effect which inadvertently supersedes Decision 215 with immediate effect. While the new decisions and regulations were postulated on 10^th August and 19^th August respectively, official announcements were made on September 2.

Major Changes

As per Resolution 57, the authorities have issued a list of exempted licensees, as per the following categories, including

Investment funds and relevant setups
Tax residents associated with jurisdiction other than that of UAE
Foreign entity branches with taxable income falling outside the purview of UAE jurisdiction
Entity handled completely by the UAE residents and not associated with the MNE(Multinational Group of Entities), in any given manner

However, to make the most of the exemption, the relevant companies must produce verifiable evidence and file the requisite notification.

Moreover, the Cabinet affirmed the establishment of FTA or the Federal Tax Authority for,

Assessing the relevance of the licenses as per the ES tests
Functioning as the National Assessing Authority
Impose penalties, if and when relevant
Hearing, ascertaining, and deciding on relevant appeals made by the licensees
Exchanging information with competent authorities

The changes aimed at restructuring the chain of command and handing over the power to a centralized authority rather than that synonymous with the relevant licensee governing authorities include that of the Ministry of Economy, Free Zone Authorities, and more.

Besides that, changes in regulations and decisions also had an impact on the penalties and associated impositions, with

Failure to submit notification is now penalized by the US $5,450, readily bumped up from $2,725 (AED 20,000)
Failing the ES test is now charged at US $13,625 or AED 50,000

Apart from the following, failing the test in the subsequent fiscal year is also charged at a massive AED 400,000 followed by increased chances of license suspension, non-renewal, or revocation

Providing inaccurate information is also subject to penalties, amounting to AED 50,000

Lastly, the new regulation also includes a provision for Random Inspections by the NSA (National Assessing Authority) officials.

However, more transparency in the discourse, deadlines, and relevant procedures are expected in the days to come.

What do the Changes Mean?

The features changes to the ESR guidelines instruct licensees to cross-check the documentation to stay relevant to the Economic Substance. Every aspect of ESR obligation, related to the Relevant Activities must be reiterated and analyzed to check for compliance failures, erroneous or delayed submission of notifications, delayed filing possibilities, and other forms of risk mitigations for avoiding penalties.

There will also be an online portal, launched by the MOF for filing reports and notifications, electronically, as per the new Decision 100.

ESR Return or Submission by 31^st December 2020 is also stressed upon for licensees to verify compliance, once and for all. The ESR Return must declare the following:

UAE-centric management with a relevant directorate
Insights into the adequacy related to physical assets, expenditure, and workforce
CIGA or Core Income Generating Activity channels across the UAE for Relevant Activities

How IMC can help?

Considering the brevity of the situation and the more stringent set of guidelines to adhere to, we, at IMC, might just help you stay within the scope of ESR while ensuring cent percent compliance and adherence to the existing regulations. In case of non-compliance is obvious, our professionals help speed the remediation process, within days.

As a leading global accounting firm, we help you assess the numerous impacts of the recent changes on the business and financial activities while paving the way for a more sustainable future. We conduct preliminary compliance assessments and offer time-intensive and efficient solutions for instilling a culture of holistic statutory and administrative transparency.

Newsletter, U.A.E

Dubai Multi Commodities Centre attracting new Investors with 50% reduction in Business Set-up Fees

September 10, 2020

According to Dubai’s Government Authority on commodities trading and enterprise, the DMCC has reduced business set-up fees by 50% to entice international diamond firms for DMCC company formation in Dubai. The 50% discount went into effect this past August and will expire at the end of September of this year. Furthermore, new company registrants will be given a 1-year membership in the DDE (Dubai Diamond Exchange) community of more than 1,000 of the top diamond firms in Dubai.

The Minister of State for Foreign Trade and UAE Ministry of Economy, His Excellency Dr. Thani Bin Ahmed Al Zeyoudi, stated that precious metals and stones trading is a key component of the country’s economic investment diversification agenda. The UAE Ministry of Economy is currently focusing their efforts on generating a new stage of economic development and growth by making the diamond trade a priority. He went on to say that the DMCC should be applauded for their ambitious vision and their efforts, as Dubai has turned a period of turbulence into an opportunity.

Though globally, diamond industry is passing through a volatile time, yet after nearly 2 decades of expeditious growth, Dubai has quickly evolved into the leading hub for the world’s diamond trade. In the 15-year period from 2003 to 2018, the total value of polished and rough diamonds rose from $3.6 billion or Dhs 13.2 billion to $25 billion or Dhs 91.8 billion. The DMCC also revealed their plans for assisting Dubai in becoming the leading international trading hub for colored stones and Laboratory Grown Diamonds (LGD) as well.

While many perceive the current turbulence in the diamond industry as a threat, Dubai sees this as a grand opportunity to promote new business setup in Dubai. For the UAE, the key element of their approach to business is adaptability. The Dubai government is hopeful that the reduced set-up fees will help to eliminate the business entry and supply barriers by supplying the support businesses need during these challenging times. It is widely felt that the future of diamonds is in Dubai.

Chairman of Dubai Gold and Jewellery Group, Tawhid Abdullah had said that Dubai has managed to traverse the difficulties, for UAE to become synonymous with the bustling diamond trade. Even though global trade in diamonds is low-key as of now, Dubai has taken a head start and with DMCC playing a major role in securing stability in precious gems and metal trade.

When the DMCC was established in 2002, it dedicated its efforts to developing an ecosystem of facilities, services, and a state-of-the-art infrastructure that would attract, encourage, and promote diamond trading in Dubai. Thanks to the growth of the DDE, considered by many to be the largest diamond tendering facility in the world, Dubai is now the heart of the diamond trade in this geographic region. Additionally, the DMCC has welcomed Lumex, a company that produces laboratory-grown diamonds, into the Free Zone’s LGD community.

CEO and Co-Founder of Lumex Vishal Mehta recently shared his appreciation for being invited to join the DMCC and praised their efforts at promoting the diamond trade in Dubai. Mehta went on to say that the support being provided by the DMCC has enabled their company formation in Dubai and throughout the Middle East. There are now over 1,000 diamond company members in the DDE. The DMCC is also promoting memberships for laboratory-grown diamond companies. In fact, the DMCC held the very first LGD trade fair at the DDE and had over 50,000 carats on display.

Newsletter, U.A.E

Is now the right Time to Launch a Business in MENA? The Experts say “YES!”

September 10, 2020

The pandemic has left the world economies in shambles and the unemployment rate is touching a new high in many countries. Establishing a new company or launching a new business might be counter-productive, according to most people. However, other feel that it is a good time for business setup in Dubai due to the concessions and tax leeway granted by the government agencies.

Setting up businesses take time and if you set up a business and incubate it for a few months, the economy is bound to recover. This will allow businesses get the necessary time to grow as the economy thrives in the post pandemic scenario. While there is “never a convenient time to become an entrepreneur”, experts believe that if you are able to make niche for your small entrepreneurship and get the right leverage, your success will grow as the economy recovers.

If you are thinking about doing it, here are 7 reasons for doing the unthinkable and launching a new business in MENA.

Business opportunities tend to bloom during a recession – when a product or service can find a fit in the global market, new businesses tend to gain momentum over the ensuing months. By arming yourself with the right knowledge, you can fill the needs of many as well as the gaps left by other businesses, by taking the next step for company formation in Bahrain.

Find a U.S.P. (unique selling proposition) – when the status quo is being challenged as it is today, you have to address it head on. The key to company formation in Qatar in these uncertain times is to identify a need and create a solution that will satisfy it. Remember, if you’re not solving something in this business climate, you won’t be successful.

Launching during a crisis may be more cost-effective – numerous free zones and entrepreneurial hubs are offering new business start-up incentives that you might be able to take advantage of. Most UAE free zone authorities are offering application fee waivers as well as discounted business licenses and lease of rental agreements.

MENA is becoming increasingly more digital – businesses are collaborating via Hangouts, Teams, and Zoom. So, the in-office meeting is quickly becoming extinct. This could provide an opportunity for ambitious and savvy entrepreneurs. Keep in mind the fact that there are now more consumers buying items online than ever before.

Striking out on your own during a crisis grabs the attention of investors – the true entrepreneur will see a crisis as an opportunity to establish a niche for themselves. This tells potential investors that you are resilient and not afraid of risk. If your business can thrive during difficult times, you’ll experience explosive growth when times are better.

Unavailable top talent may now be available – during times of crisis, companies are often forced to let go of their best talent which means these individuals are looking for a new place to use their talents. The bottom line is that there are lots of specialists who need to find work and you could fill that need with a little effort.

When the going gets tough, shift into creativity mode – due to the pandemic and its impact on businesses globally, this has created a robust state of creativity. This has caused a shift from survival mode to the start of an entrepreneurial revolution of sorts.

Newsletter, U.A.E

Dubai Remains the Leading Global Destination for Foreign Direct Investments (FDI’s)

September 10, 2020

For companies who are contemplating a new business set-up in Dubai, the following should be helpful in the decision-making process. Despite the business and economic repercussions of the first half of 2020, Dubai has managed to hold its position as a leader in FDI’s or Foreign Direct Investments in the MENA (Middle East and North Africa) region. Based on recent statistics published in Financial Times’ FDI Markets, Dubai was ranked #3 in greenfield FDI’s and 4^th in capital flow on a global scale.

Economic Growth and Recovery

Dubai Crown Prince Sheikh Hamdan Bin Mohammed Bin Rashid Al Maktoum recently stated that FDI’s are continuing to flow into the area with current FDI projects valued at AED12 billion ($3.27 billion). This was a positive move that showed other countries are doing business in the UAE and that reinforced the premise that economic laws are conducive in UAE. These projects included the e-commerce, pharmaceutical, and technology sectors. These figures and statistics are a reflection of how attractive the investment environment is in Dubai and how well the economy has been recovering from the Coronavirus pandemic.

Achievements on a Global Scale

Sheikh Hamdan expressed his sincere gratitude as the emirate has been ranked as one of the world’s top destinations for FDI’s. This is attributed to the attractiveness and diversity of investment opportunities in emerging and strategic economic sectors. Dubai was ranked as the #1 FDI destination in the Middle East and North Africa (MENA) region and 11^th out of 20 worldwide FDI destinations (see FDI Markets’ Global Venture Capital FDI Ranking 2020 report).

Pertinent statistics indicate that sustained FDI investments in Dubai company incorporation exceeded AED 739 million ($201 million) during the first half of 2020. Rankings published in the “FDI Aerospace Cities of the Future 2020/2021” report showed Dubai as #7 out of the 10 top global destinations while achieving a #2 ranking in global FDI performance in that particular sector. Additionally, Dubai FDI Monitor data showed an increase of 53% in medium to high technology investments during the first half of 2020.

CEO of Dubai FDI, Fahad Al Gergawi emphasized that as the current world leader in global investment destinations, Dubai has already adopted measures to navigate the challenges of the pandemic. He was of the opinion that most of the FDI projects in the H1 2020 were marked by innovations in technology, cash flow and better operational capabilities. The rising trend of improvement in the economic functioning, confirms the advancement of investments in Dubai.

New Growth Opportunities

Director General of Dubai Economy, His Excellency Sami Al Qamzi, stated that Dubai’s successful development of new investment opportunities were attributed to Foreign Direct Investment trends in the first half of 2020. These new opportunities for sustained expansion and growth in Dubai have presented themselves under Sheikh Hamdan’s leadership and directives. This has made the global and local investment communities stronger despite having to overcome the challenges of the Coronavirus pandemic and has benefited DIFC company formation.

In addition to this, Al Qamzi stated that the first half of 2020 saw positive developments in Dubai’s and the UAE’s investment environments that were that were supported by UAE FDI laws and regulations as well as business continuity stimulus packages. Al Qamzi went on to praise the private sector’s role as a strategic partner in overcoming the many challenges of the COVID-19 pandemic. This increased the competition and resilience of the Dubai economy while at the same time ensuring that supply chains wouldn’t be interrupted.

Newsletter, U.A.E

New Law protects Family-owned Businesses in the UAE

September 10, 2020

His Highness Sheikh Mohammed Bin Rashid Al Maktoum recently issued Law No. (9) which regulates Dubai-based family-owned businesses. This will benefit many existing businesses and also benefit those who want to launch a new business setup in Dubai. Law No. (9) seeks to:

enhance family-owned business contributions for economic and social development
foster family-owned business expansion and growth
protect the wealth of families that own businesses in the UAE

Furthermore, this law applies to current and new family-owned businesses including proprietorships and corporate equity securities. Public joint stock companies that are family-owned as well as movable and immovable properties are not regulated by this new law. While this is a progressive approach to the protection of a family’s wealth, it also provides an option for families doing business in UAE to customize the terms within their Family Property Contract. As per the new law, the validity of the ownership contract is extendable for 15 years and can be renewed periodically after that.

This new law was implemented after many family-owned Dubai businesses petitioned the UAE government to adopt economic measures to prevent the impact of the pandemic on their businesses.

Stipulations of the Family Ownership Contract

All parties of the Family Ownership Contract must be immediate family members and have a common goal and single interest in order for it to be legally binding. Additionally, each member’s share must be clearly defined in the contract. Plus, the parties must have all legal rights to the assets and revenues that are found within the scope of the contract. A notary public must attest to the rules and regulations concerning Dubai notaries public as stipulated under Law No. (4) of 2013.

Validity and Renewal Issues

According to Law No. (9) 2020, the validity of the contract can be extended up to 15 years. Renewal for a similar term is possible provided all parties involved in the Family Ownership Contract agree to do so. In addition to regulating the articles of the contract, Law No. (9) also regulates the following:

authorities and responsibilities of the board and management
business’s management and structure
formation of the board of directors or owners
management’s limitations and powers

The authorities and responsibilities of government entities regarding the formation of a family-owned business is also defined under this new law. Any other legislation that challenges or contradicts the articles of the contract will be annulled.

Finally, should any dispute arise between the members of the Family Property Contract, it shall be settled by a judicial committee made up of family management, financial, and legal experts. This will ensure the confidentiality and privacy of these matters and will help to resolve the dispute in an efficient and timely manner. Last but not least, the law will be valid as of its publishing date in the Official Gazette.

Newsletter, U.A.E

Business Deals Will Soon be taking place between Israel and the UAE

September 10, 2020

With the recent signing of the historic peace agreement, Israel and the UAE have taken steps in normalizing the ties between the 2 countries and formalizing a combined effort to research the COVID-19 pandemic. This could open ties between such industries as air travel, investment, security, telecommunications, and tourism. The world could soon be seeing cross-border ventures for doing business in UAE as well as Israel. All of this resulted from a landmark call that took place between Israel’s Minister of Foreign Affairs Gabi Ashkenazi and UAE Foreign Minister Sheikh Abdullah bin Zayed al Nahyan.

Company Alliances being formed

With the announcement of the peace agreement on August 13th, decades of hostility and opposition were finally set aside while promises were made to open ties in the industries above. For example, Etisalat (Emirates Telecommunications Corp,), the UAE’s largest phone company is in advanced talks with Partner Communications, the wireless operator of Israel. In addition to this, Israir Airlines Ltd. has applied for landing permits in the UAE. Finally, Israel’s TeraGroup has agreed to join forces with UAE-based APEX National Investment and research the Coronavirus.

Recent Stock Gains and other News

In other noteworthy news, the peace agreement has continued to reverberate through stock markets in the Middle East. For instance, Israel’s TA-35 was up as much as 2% while the indexes in Abu Dhabi and Dubai rose 0.6% and 1.3% respectively. Additionally, Stock indexes were up in other countries including Bahrain, Egypt, Kuwait, Qatar, and Saudi Arabia.

According to the Times of Israel, a recent phone call took place between Bahrain’s Prime Minister and the chief of Israel’s spy agency Mossad. An Arabic-language news reporter for Israel tweeted that a future meeting between the two has been planned and may lead to a peace agreement between those two countries as well. Interestingly enough, Bahrain has denied that the phone call occurred while there was no comment from Israel’s Office of the Prime Minister.

India, Newsletter

Indian PM Modi Announces Long-awaited Digital Projects

September 10, 2020

India celebrated their independence from the British Empire for the 74^th time this past August 15^th. It was also the day Prime Minister Modi announced the launching of three Digital India projects that could result in new company formation in India:

the National Digital Health Mission
a new cyber security policy
the promise of optical fiber connectivity to 600,000 villages over the next 1,000 days.

The following is a breakdown of these three monumental projects.

National Digital Health Mission

The beginning of India’s new digital health infrastructure took place in 2017 when the National Health Policy was implemented. It proposed a National Digital Health Authority and released the blueprint for it two years later (July, 2019). This past August 7^th was the release date of the NHDM’s (National Digital Health Mission’s) which outlined the digital registration of:

doctors
hospitals
digital clinical decision systems
digital personal health records
pharmacies
insurance companies

As a result, patients can now share their information between doctors and hospitals in a digital format by simply creating a Health ID. Furthermore, they can choose the specific documents they want to share with whom for as long as they want. To get the government benefits, people will need to connect their health IDs with the Aadhaar cards. In early weeks of July, NDHM began consultation and collaborations with insurance companies, large hospitals, laboratories and licensing authorities to ensure smooth functioning when the scheme is implemented. Other key features would include tele-medicine, data analytics tools and online pharmacy.

New Cyber Security Policy

The existing cyber security policy was born when whistleblower Edward Snowden said that India’s domestic issues were being monitored by the US National Security Agency. The scope and sophistication of cyber attacks and intrusions has increased dramatically over the past decade and are now targeting critical information infrastructure as well as sensitive business and personal data. Consequently, this poses a serious threat to the national economy and security. Due to a number of technological developments, there are significant challenges to contend with in the cyber environment such as:

access to overseas data
cyberspace law enforcement
data privacy and protection
global cooperation regarding cybercrimes and cyber terrorists
misuse of Facebook, Twitter, and other social media platforms

Additionally, this will likely require the revamping and revitalization of existing structures. This may also have an impact on the passage of data protection legislation by a Joint Select Committee in India’s Parliament when attracting new companies in India.

Optical Fiber Connectivity

The Indian Government is referring to this as the “largest connectivity project in the world today.” BharatNet (Bharat Broadband Network Limited) which is governed by the Government of India’s Department of Telecommunications, is the country’s telecom infrastructure provider. Under this project, roughly 800,000 kilometers or nearly 500 miles of OFC or optical fiber cable to cover more than 2,50,000-gram panchayats with an estimated cost of the project to be over $6.2 billion. Although it was unable to meet its original deadline of March 2020, the project is still on track to be completed in the ensuing year. It has encountered multiple snags over the deadline and the most prominent issue that is cropping up is the lack of bidders for maintenance. This is partly due to keeping Chinese vendors out of the tender ambit.

Newsletter, U.A.E

DIFC Unveils a New License in a Bid to Boost Entrepreneurship and Creativity

September 1, 2020

Dubai International Financial Centre (DIFC) has recently unveiled a new license for tech companies, entrepreneurs and start-ups. With the license, DIFC company formation has now been made more efficient. The new license, dubbed “Innovation License,” is expected to attract different types of enterprises and businesses to the center. As per a recent press release by the DIFC, the new license is also an important initiative towards the Dubai Future District plan, which was announced back in January this year by His Highness Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and the Prime Minister of the UAE.

Innovation License is designed to support entrepreneurship, innovation and creativity in the Middle East, Africa and South Asia (MEASA) region. Business organizations will expand and scale their operations using the Dubai International Financial Centre’s independent English Common Law-based data protection regime as well as legal and regulatory framework. Holders of the Innovation License will join the network of tech companies in the region’s largest financial free zone that consists of more than 2500 enterprises and 25,000 professional individuals.

The Innovation License costs $1,500 and provides business organizations with access to co-working spaces at Dubai International Financial Center. License holders also get access DIFC co-working spaces at subsidized, attractive prices. A top executive at DIFC Authority, Salmaan Jaffery, mentioned that the new Dubai Innovation License provides a prominent opportunity for future business aspirants to start, upscale and secure their enterprise within the framework of a global financial centre.

The license has indeed incentivized business setup in Dubai. Jaffery added that he hopes the new license will attract technology-focused enterprises that will transform the financial sector. In his opinion, these entities can shape the economic future that UAE holds.

With an aim of becoming a leading fintech hotspot, the DIFC has been working on and launching various initiatives and policies in order to attract foreign firms. It also intends to build a nurturing environment for businesses to thrive and succeed. The center is a proud home to over 730 active financial companies in addition to 120+ fintech firms.

Intuit Management Consultancy (IMC Group) can help businesses with DIFC licensing processes in a hassle-free manner owing to their experience and hands-on expertise.

Newsletter

Despite Pandemic’s Hits to the Economy, Southeast Asian Startup Investments have nearly doubled

August 12, 2020

During the second quarter of 2020, we saw investments in Southeast Asian startups nearly double despite the damage to the global economy caused by the COVID-19 pandemic. Most of this surge of investments was driven by e-commerce and FinTech (financial technology) companies. According to DealStreetAsia, the Singapore-based startup information platform, the value of fundraising in southeastern Asia rose 91% to nearly $3 billion during the second quarter (April – June, 2020). At the same time, the number of transactions rose 59% for the same period.

Interestingly enough, many countries were under a strict lockdown during the second quarter of the year. To say the least, this hampered deal-making opportunities while economic uncertainty discouraged many investors. However, a number of different venture capital funds raised a significant amount of investment funds. According to an interview with Monk’s Hill Ventures’ co-founder and managing partner Kuo-Yi Lim, most deals had been in the pipeline since earlier in the year.

During the past 5 or 6 years, two largest ride-hailing businesses in the region (Gojek in Indonesia and Grab in Singapore) have led the way in the startup funding boom. During the first quarter, these two businesses were responsible for raising 70% of the regions’ revenues. This equates to over$2 billion. We witnessed a different picture in the 2^nd quarter as the e-commerce sector raised $691 million while the FinTech sector raised $496 million and logistics raised $360 million.

Furthermore, a considerable amount of funds were raised by a number of other local companies as well. As a result, Southeast Asian economic experts contend that this is an indication that the COVID-19 pandemic has generated an increase in Singapore company incorporation. The 2^nd quarter’s biggest fund raiser was Tokopedia, an Indonesian-based e-commerce company. According to DealStreetAsia, Tokopedia secured $500 million from Temasek Holdings, a Singapore-based investment firm.

Furthermore, the Vietnamese e-commerce company Tiki secured $130 million from the private equity firm Northstar Group. According to Tiki Vice President Ngo Hoang Gia Khanh, the company witnessed a dramatic increase in consumer shopping needs where face masks, hand sanitizers, and other necessities were concerned. As competition continues heating up in Vietnam’s local and regional business sectors, Tiki offers unique services in order to differentiate itself from other companies doing business in Vietnam.

With a network of fulfillment centers operating nationwide, the company provides an express delivery service known as TikiNow for shipping packages to customers within 2 hours from the time their order is received which is faster than their competitors. They also offer free, on-the-spot installation of bulky and heavy items. As Southeast Asia’s demand for online shopping venues continues to increase, delivery and logistic startups have also enjoyed increased revenues. For example, Kargo Technologies of Indonesia raised $39 million while Ninja Van of Singapore raised a whopping $279 million.

The FinTech sector has also seen some significant fundraising in several companies. For example, Voyager Innovations, the parent company of mobile payment app Paymara of the Philippines raised $120 million this past April from Tencent Holdings of China and KKR, a US private equity fund – two of their current shareholders. As the first funding round the company has had since 2018, Voyager Innovations was able to compete with their in-country rival Mynt.

Other notables in the fundraising deals arena included:

Cleantech Solar of Singapore (energy sector) $75 million
Kopi Kenangan of Indonesia (food and beverages sector) $109 million
RWDC Industries of Singapore (biotech sector) $133 million
Synqa of Thailand (FinTech sector) $80 million
Traveloka of Indonesia (online travel agent) $100 million

India, Newsletter

Indian Startups endure unprecedented Challenges but still find Opportunities during COVID-19 Pandemic

August 12, 2020

Although the first half of 2020 was supposed to be a banner financial period and witness accelerated growth throughout numerous sectors, the COVID-19 pandemic had other ideas. In every industry sector, we saw unprecedented economic challenges, especially among early-stage startups. It’s not about the industry sector that suffered the least or most amount of damage anymore, but rather the extent to which each sector was hurt, hence the decline in company formation in India.

From the standpoint of damage assessment, the hospitality and travel sectors suffered the most in the way of economic losses and realistically, these will most likely be the two sectors that have the longest recovery period under what is now the “new normal.” Furthermore, sectors such as logistics, manufacturing, transportation, and other areas that are classified as “people intensive” will be facing difficult challenges as well. However, there is hope that things will get better over the next few months.

How have Emerging Sectors been affected?

Emerging sectors such as the hygiene industry gained prominence as a result of the COVID-19 pandemic and good hygiene has been a hot topic of debate in India. Unfortunately, very little action has been taken over the years. However, this will likely change because of the global impact of widespread contamination risks. The Prime minister, Narendra Modi had been emphasizing and launching campaigns to improve hygiene and sanitation for the past few years. This has improved the situation but a lot still needs to be done.

Whether it’s a matter of community, personal, or surface area hygiene, the landscape has changed dramatically over the past several months. Even now, we’ve been seeing a dramatic increase in the number of India attract investment post-COVID-19 efforts among numerous early-stage startup companies.

Adversity – a significant Source of Opportunity

Ever heard the expression “War not only destroys, but also creates opportunities for those who are resilient and keen to rebuild.”? Well, the world has been at war with the Coronavirus and it has provided many difficult challenges yet amazing opportunities. We’ve seen numerous economic, financial, and physical challenges including:

Cash flow impact attributed to lost sales
Funding and investment plans being put on hold
Growth setbacks for companies of all sizes
Manpower shortages in labor-intensive industries including agriculture, construction, manufacturing, and so on)

Coincidently, this has given rise to numerous opportunities on a global scale such as increased online sales and product innovations. Indian companies are now focusing on delivering their products to the consumer’s residence. And guess who will benefit the most from all this? Those startups who figure out a method that meets these demands and fulfills the needs of the consumer will benefit the most.

The bottom line is simple. Indian startups that are capable of creating products that address the needs of the global marketplace will witness accelerated growth that surpasses pre-Coronavirus economic times. The future looks bright.

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Blog

Premise

The Change

Major Changes

What do the Changes Mean?

How IMC can help?

Economic Growth and Recovery

Achievements on a Global Scale

New Growth Opportunities

Stipulations of the Family Ownership Contract

Validity and Renewal Issues

Company Alliances being formed

Recent Stock Gains and other News

National Digital Health Mission

New Cyber Security Policy

Optical Fiber Connectivity

How have Emerging Sectors been affected?

Adversity – a significant Source of Opportunity

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