India started reopening its factories on Monday after spending more than a month in strict lockdown, a measure that helped contain the coronavirus outbreak but brought the economy to its knees.

But challenges loom. Workers and materials are difficult to find. Logistics is a headache and demand in many categories has all but vanished.

Still, several companies, ranging from car maker Hyundai Motor India Ltd to two-wheeler manufacturer Hero MotoCorp Ltd, to consumer appliances major Whirlpool of India said they will be restarting operations gradually from this week, as the government eased lockdown curbs to allow companies to reopen in green zones—areas that are covid-free for more than three weeks.

The loosening of curbs based on whether factories or offices are located in red, orange and green zones—as per the level of infections in these areas—means the start of business operations will be uneven. With most industrial areas falling in red zones, where most curbs have not been eased, reopening factories in these areas will have to wait.

“The new guidelines provide flexibility for resumption of economic activities in the green and orange zones. Even in red zones, the government has allowed economic activities involving essential goods and services, with certain conditions,” said T.V. Narendran, managing director of Tata Steel Ltd. “However, production is a function of demand, and from that point of view, it appears to me that we shall only see a gradual opening up.”

Narendran added that availability of labour and a liquidity crunch are two other bottlenecks for industry and urged the government to facilitate both for business resumption.

Industry executives said the government would also need to help build consumer confidence through health and sanitization measures as well as public messaging.

Harsh Pati Singhania,vice-chairman and managing director of JK Paper and director at JK Organisation, said there is currently fear and anxiety among people that they would get infected if they step out. Unless such a deep-rooted worry is removed, industry will be hampered by not only low demand but also a shortage of workers, as many are dependent on migrant labour, he added.

“With most households at home and shops being largely closed, particularly in high-demand areas in cities, consumption is bound to suffer,” said Vikram Kirloskar, president of the Confederation of Indian Industry. “We hope that demand will revive as phase 3 of the lockdown kicks in.”

While transportation of goods has been somewhat smoothened after the appointment of nodal officers to coordinate between Centre and states, requirements of social distancing for workers remain a barrier, he said. “Some states have come out with notifications, and more are yet to clarify the norms.”

Companies said they will adopt a calibrated approach to reopening of businesses and are encouraging a significant part of their employees to work from home.

“We are resuming our business this week in a calibrated manner, in line with the rules laid out by MHA (ministry of home affairs) and respective state government directives,” said Vishal Bhola, managing director of Whirlpool of India. “Safety of our associates is of primary concern, and we are going to continue to work from home as much as possible while ensuring social distancing (norms) are adhered to in the facilities that are open.”

He added that customer footfalls are yet to show up as most stores are closed; but even after they open, customers are likely to make more “contactless” buying decisions.

An Amazon India spokesperson said that the company is accepting orders based on the latest government rules.

“Our consumers in orange and green zones are buying other priority products that they needed the most,” the spokesperson said. “We are seeing a demand for various kinds of smart devices and other products related to electrical appliances, clothes, work from home enablers, etc., in the orange and green zones. We urge the government to allow an expanded list of priority products in the red zone as well.”

Rajnish Wahi, senior vice-president, policy and communications, Snapdeal, said that the company is looking at a phased reopening of businesses with a team in office not exceeding 40% of the workforce for the time being.

“Many workstations have been marked as ‘not for use’ so that team members sit apart. The meeting rooms have been marked down to less number of people,” he said.

Small consumer product businesses said they are seeing demand broadening.

“Currently, we are seeing a lot of pin codes opening up for deliveries. However, red containment zones will continue to be a challenge, and we will also focus on delivery of essential services there,” said Abhishek Raj Pandey, chief supply chain officer, Honasa Consumer Pvt. Ltd. which owns the Mamaearth baby-care brand.

News Source: Livemint


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