Partial easing won’t mend fractured supply chains, says industry

Mumbai | New Delhi: The business community reacted cautiously with many pointing out that the partial relaxation of the lockdown won’t be enough to repair the fractured supply chain. Industry leaders, however, said they understood the government’s predicament.

“49 days of lockdown makes statistical sense. Complete opening before that duration could have been risky. This is just four days beyond 49 days. It is, in fact, a calibrated preamble or pre-opening strategy. So, this is better than I had hoped,” Mahindra Group chairman Anand Mahindra said.

“But it won’t solve the supply chain problem in this pre-opening phase. Hence, I can only hope that the exit post-May 17 will indeed be pan-India and comprehensive,” he said.

“Post May 17, red zones and containment zones should be by exception only and full interstate movement of people and workers should be opened up. That will ‘join the dots’ of the supply chain network. If sequential opening of different parts of the country continues then, as I have said earlier, industrial recovery will be painfully slow. In manufacturing, if even one feeder factory is still locked down, then the final product assembly will be stalled,” Mahindra told ET.

Maruti Suzuki’s chairman RC Bhargava, empathising with the challenges before the government, said: “The reason why the disease is spreading is that people are not following government regulations. If the lockdown was not extended, even districts which are now orange and green may turn into red zones. Would you want that to happen?”

Bhargava said the government has specified activities which can happen in certain zones and the company has to evaluate the new measures which have been announced. Others were not so hopeful. “There’s no point. They’re unable to accept their mistake. Instead, they claim victory and opt for partially opening when cases are higher than ever before,” an industrialist who did not want to be named said. Many fear that sequential opening of different parts of the country will not enable industrial activity to resume smoothly.

But IT hardware companies say they had been requesting the government for such a move. “It is a good move,” said the India CEO of an MNC IT hardware firm without wanting to be named. He would not comment whether the firm would resume production saying he had not gone through the notification.

Industry lobby groups have also been asking the government for a strong stimulus. “With restricted economic activities, the imperative for a quick and forceful economic support package for the industry is even more compelling now. CII has suggested instituting a government spending package equivalent to 3% of GDP which would add Rs 6 lakh crore to the available firepower. Enhanced debt to GDP ratio can be a way out for adding fiscal space at a time when the debt to GDP ratio is modest in India,” said Chandrajit Banerjee, Director General, CII. Mobile phone sellers are set to reopen stores as the government eases restrictions.

“All standalone (single) shops, neighbourhood (colony) shops and shops in residential complexes are permitted to remain open in urban areas, without any distinction of essential and non-essential,” the ministry of home affairs said on Friday.

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