SUMMARY
As businesses in Maharashtra state go into an extended state of restrictions, reminiscent of 2020 lockdowns, are startups better prepared for the days to follow?
The state has offered a comprehensive list of exemptions to businesses this time which has offered more clarity to startups operating across sectors
However, ecommerce platforms are not happy with the bar on delivery of non-essential goods given the severe impact this had on their business in 2020
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With the Maharashtra government imposing curfew-like curbs in the state to control the recent surge in cases, startups in the state are staring at another round of confusion and possibly business impediments for the next 15 days.
CM Uddhav Thackeray on Tuesday announced stringent restrictions in the state starting 8 pm on Wednesday (April 14, 2021) till April 30, 2021. As part of the new curbs, no one, except those engaged in essential services or exempted from the curbs will be allowed to move in public places without a valid reason, unless it’s for essential work.
While not as chaotic as the rules for the lockdown in 2020, which were sprung on startups overnight, companies will still have to go back to their playbooks from last year, particularly to figure out updates in curfews and curbs on a day-to-day basis. More importantly, with the definition of “essential services” still being vague, many businesses will be struggling to figure out how they can function while also dealing with a shortage of labour.
One major issue that businesses faced in the lockdown in 2020 was the uncertainty about what to do. Essential services were not well defined, essential services for other essential services (like logistics, cold storage, data centres, warehousing and IT) were not covered under the ambit of permitted activities and public transport was completely halted.
Unlike in 2020, there is more clarity on the fact that food delivery and ecommerce operations will not be barred this time, although the extent to which they are allowed may be questionable. At least, Zomato and Swiggy partners can expect to continue their business within the restricted time limits.
In Maharashtra, only shops with essential goods and services will be allowed to remain open between 7 am and 8 pm on working days. All establishments, public spaces, activities and services will remain closed, except for essential services. Public transport, including trains and bus services, and essential services like groceries, vegetable shops, fruit vendors, dairies, bakeries, confectioneries, all types of food outlets and public utilities, will be open. With so many restrictions in place, once again, citizens will rely on startups for everyday needs, such as those facilitating home delivery of groceries, essentials and food to survive through the curfew period.
Are Startups Ready For The Challenge?
This time around, startups are thankful that the notification has come with a comprehensive list of exemptions, thanks to preemptive lobbying by trade bodies. Offices of companies providing essential services, insurance and mediclaim companies, pharma companies (including distribution units) and RBI regulated entities among many others have been exempted from the curbs bringing a huge relief to the fintech ecosystem. Most importantly, even as hotels and restaurants have been forced to shut shop for dine-in again, home deliveries are permitted unlike last year. This is likely to bring cheer for the food aggregator platforms as well as people living without families.
“We think that the ‘Break The Chain’ notification is much more comprehensive than what we had last year. Now that everyone has been through the process once and faced teething issues, we don’t expect much chaos this time in terms of business operations as well,” said Amit Gala, chief financial officer of Mumbai-based Mswipe Technologies, which offers POS devices to merchants.
Gala noted that although Mswipe is exempted under the notification, with non-essential businesses facing the heat, Mswipe’s business volume is likely to be lower until the restrictions last. The company has noted a surge in cases across employees and their families compared to last year, and is reducing requirements for employees to step out of their homes this time around with better standard operating procedures.
Another fintech company, GrayQuest, which helps with educational fee payments also said the notifications offer much better clarity this time. “Last year, when the lockdown was imposed, businesses and the government alike were doing it for the first time. This time around, the idea of conducting operations from home does not seem as daunting,” said Rishabh Mehta, founder and CEO of the Mumbai-headquartered company.
As expected during curfews, there is a lot riding on logistics and transportation companies to keep the essential businesses running. The Maharashtra state circular has covered transportation of goods and manufacturing items needed for essential services under exempted categories. Learning from last year, many logistics and warehousing companies had already implemented pandemic protocols expected by the government including lodging facilities for employees, staggered breaks and remote management.
“Throughout 2020, we invested a lot of time in building processes which would allow each division to perform seamlessly. We work with clients who have on the ground operations (like McDonald’s, BurgerKing, transportation companies) and there has been a lot of disruption here and we’re working with them to figure out how to tackle this.” said a LogiNext spokesperson in response to Inc42 queries.
But All Is Not Well
While many businesses are not as worried as last year, others are dreading the return to absolute zero again. Just when business had stabilised for the ecosystem, the second pandemic wave has put startups off track. Despite offering guidelines and allowing a larger range of services to function compared to 2020, restrictions on sale of non-essential goods is going to be a dampener for the ecommerce companies.
Platforms like Amazon, Flipkart and JioMart started notifying users with pincodes in Maharashtra about the restrictions earlier in the day. Ecommerce lobbies are already making representation via industry bodies to Maharashtra government and the Ministry of Home Affairs (MHA), seeking reversal of the restrictions of non-essential deliveries, according to reports. FICCI, CII and NASSCOM among others are said to be looking into the matter.
However, the real challenges will be clear only after a few days, when citizens, businesses and the government alike will be able to gauge on-ground issues. While businesses have learned to work around pandemic restrictions, their dependence on vulnerable human capital will continue to determine the outcome of this latest exercise to break the chain of Covid-19 cases.
