India’s national lockdown which ended on May 3 has been extended for the second time, until May 17, with conditional relaxations for resumption of economic activity, but the domestic steel industry is still in ‘wait and watch’ mode before immediately resuming manufacturing activities, SteelOrbis has learned from various industry leaders.
The government has imposed onerous conditions for industries to resume operations based on zones demarcated as ‘red’ ‘orange’ and ‘green’, but most industries including steel and automobile prefer to delay normalization of operations in the face of the challenges of achieving seamless supply chains spanning across various color coded zones on the one hand and distribution and marketing chains spanning across urban areas which fall largely in high risk zones on the other hand.
The Confederation of Indian Industry (CII), the country’s leading industry representative body, has called for the economic contribution of each district to be taken into consideration when classifying lockdown zones.
It said that districts with high economic contributions should be permitted to resume all industrial activity including in containment zones with the highest safety protocols. It said that the difference between essential and non-essential activities should be removed and that all factories should be permitted to start operations.
“The current third phase of lockdown necessitates a focused strategy to minimize economic contraction because of Covid-19 without compromise on efforts to control the contagion. While the lockdown has been necessitated by the rapid spread of Covid-19, the pandemic has caused immense stress to financial sustainability of several businesses,” CII director general, Chandrajit Banerjee said.
Maruti Suzuki, the country’s largest passenger car manufacturer which has been permitted to resume operations at two of its plants is not in a hurry either to normalize production.
“Permission to open both our factories is just one of the issues. We are figuring out how many of our vendors are not in containment zones so that they can also start production. We also have one month’s production equivalent of inventory, so not only our dealers will be able to open up but customers should also be returning to dealers,” R C Bhargava, chairman of Maruti Suzuki, said.
“We may start production in the third or fourth week of May. But nothing has been decided as yet. A bigger question than restarting production is where is the demand,” Shekhar Vishwanathan, vice chairman of Toyota Kirloskar Motors Limited, said.
Tata Steel CEO T V Narendran said, “We are operating at 50 percent of our production level and can increase it to 60 percent. But the major challenge is sales. We need our customers to get started. Operations are not an issue. Sales is.”