Economy, Indian Economy, Markets
Liberalisation involved the removal of licensing and the requirement to get clearance from the Monopolies and Restrictive Trade Practices Commission. Representational image: iStock

As India reopens economy, companies resume work

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Top companies across sectors – automobile maker Maruti Suzuki, consumer electronics giant Samsung to IT giant Infosys – have reopened factories and offices as India took its first steps towards resuming economic activity after weeks under a near-total coronavirus lockdown.

While the government has allowed businesses to resume under strict guidelines, companies are not rushing to achieve pre-COVID-19 run-rates and instead are calibrating staff strength as they are aware that any incident of infection can prove costly. Companies said employee safety and workplace hygiene is the prime focus.

While Maruti resumed operations at its Manesar plant in Haryana on Tuesday, Infosys opened offices in some cities with up to 5 per cent staff and plans to gradually raise employee strength to 40 per cent. Tata Consultancy Services (TCS) has less than 1 per cent of its employees currently in India offices. Mahindra & Mahindra too started operations at its factories with a limited number of workers.

Flipkart, Panasonic India, Whirlpool and Dabur are among a host of companies that have put in place plans to restart operations with a small section of staff. Tata group-owned jewellery brand Tanishq has announced its plans to reopen its 328 stores across the country in a phased manner. The government imposed a nationwide lockdown on March 25, and it has already been extended twice — first until May 3 and then again until May 17.

However, some curbs have been eased beginning April 20 with permission being given to industries in rural areas to restart. Later, production, sale and transport of goods in areas where virus cases are less severe have also been allowed. However, the process of restarting factories and businesses is likely to be protracted, with production only gradually ramping up towards operational capacity levels.

IHS Markit said although the limited restart of some industries has been permitted since April 20, India will still suffer severe disruptions to its industrial output due to the protracted lockdown. “The Indian economy is facing a recession in the 2020-21 financial year for the first time since 1979-80, during the second OPEC oil crisis shock,” IHS Markit said. “Consequently, IHS Markit expects the lockdown measures to result in a contraction of Indian industrial production in the 2020-21 financial year.”

But several companies across sectors ranging from textiles to consumer electronics and liquor to pharma have partially resumed operations after getting permission from local authorities. While Panasonic India and South Asia President & CEO Manish Sharma said the company plans to start operations at its factory with 30 per cent capacity and slowly take it up to 50 per cent in a months time, Samsung Electronics India said its Noida factory has started limited operations.

The Noida factory of Dixon Technologies too has resumed operations. The firms Tirupati and Dehradun plants too have started operations at about one-third capacity, which will be scaled up to 75-80 per cent in the next one week, said Sunil Vachani, Chairman, Dixon Technologies. Neeraj Bahl, the CEO of BSH Home Appliances — German company which manufactures and sells under Bosch and Siemens brands in India — said the firm is in process of starting production in its Tamil Nadu factory with limited staff.

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Mahendra Singhi, President, Cement Manufacturers Association (CMA), said 25-30 per cent of cement production capacity in the country has resumed. JK Lakshmi Cement director Shailendra Chouksey said the firm has clearances to operate all its seven plants in five states with reduced staff strength and following governments COVID-19 guidelines for factories. “However, these measures alone shall not suffice. Unless construction is allowed rather encouraged to resume operations”, the sector outlook would not be very good, he said.

Consumer Electronics and Appliances Manufacturers Association (CEAMA) president Kamal Nandi said slowly retail operations are opening up in green and orange zones. “Roughly industrys 30-35 per cent outlets are open throughout the country though geographically not equally distributed.” “We have also got permission to open factories in green and orange zones. Most of the brands are preparing to resume operations. Some brands started last week and some would start from this week.

Even more important, the suppliers plant is opening up and we are all preparing to resume operations and slowly production would start,” he said. There is still no pressing need for the brands to go ahead and start mass production from day one as there is a lot of inventory in warehouses and with dealers, he added.

Society of Indian Automobile Manufacturers (SIAM) director-general Rajesh Menon said the auto sector lost over Rs 90,000 crore in revenue due to the lockdown. Ashok Leyland MD & CEO Vipin Sondhi said these are truly unprecedented times, and the government and industry need to work closely to bring the industry back on its feet.

The government is said to be working on a second fiscal package to support businesses, particularly small and mid-sized companies that account for about a third of Indias gross domestic product (GDP) and employ more than 11 crore people

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