The ongoing COVID-19 crisis is proving to be a major disruption for the global trade industry. Traders around the world are having to adjust to the new normal and ensure that their transactions are not impacted to a great extent
· The pandemic has resulted in a sharp increase in the demand for certain products
o One such product is personal protective equipment (PPE), which is used to protect medical professionals from infections
o The demand for PPE kits has increased because healthcare workers need these kits while performing their duties
o According to May 2020 estimates, the domestic demand for PPE kits in India is likely to be Rs 10,000 crores for the next one year
· This blog provides information regarding importing PPE kits into India and also highlights the ways in which trade finance can help
Importing PPE Kits into India
· The demand for PPE kits has been on the rise around the world, and India is no exception. As recently as March 2020, the country did not manufacture any PPE kits domestically, and all the demand was fulfilled via imports
o The total number of PPE kits available in the country during January 2020 was only 2.75 lakh, and all of these had been imported from different parts of the world
· However, the COVID-19 crisis has meant that India has ramped up its production to 4.5 lakh kits per day
o Despite this surge in production, the demand is so high that these kits need to be imported from several overseas markets
o The key countries that export these kits to India include Canada, the UK, Sweden, Austria, and the US
· The HS Code for PPE kits that are used for medical or surgical use is 621010
o In addition, several complementary products such as masks, footwear, and face shields are categorized under codes 630790, 640110, and 392620, respectively.
· Traders who want to import PPE kits have to pay a customs duty of 10% and a total duty of 15.5%
How Trade Finance can help
· Trade finance can prove to be of great help when it comes to importing PPE kits into India. It can ensure that the supply risk and payment risk is fully covered
· Traders who are engaged in the import of these kits tend to place bulk orders because of the high demand. Placing bulk orders can also ensure that the unit price is minimized
o However, large orders also come with increased risks such as shipment delays and non-payment
o This is where traders can make use of trade finance instruments in order to mitigate the risks
o Some of the trade instruments that could help you in reducing these risks include Letters of Credit and Bank Guarantees
· Trade finance can also protect importers by ensuring a high degree of flexibility and convenience
o Modern-day trade instruments are fairly flexible, and they allow traders to import products as per their requirement
o In addition to the above, trade finance also provides a high degree of security, thereby helping importers in building long-term trade relationships with exporters from other countries
Conclusion
In order to mitigate the key risks associated with the ongoing pandemic, traders can seek help from external institutions. Institutions such as Euro Exim Bank offer useful solutions like financial instruments as well as customised trade advisory services. Euro Exim Bank offers instruments such as different types of Bank Guarantees and Letters of Credit (LCs). To Acquire your Trade Finance Instrument within 48 hours* Click here