Time to start manufacturing activity even in Red Zones: CII president

Insisting that economic activity should start now, Vikram Kirloskar told The Daily Guardian that health and economy needed to go together or else survival could be threatened.

CII president
CII president

As India lifted certain restrictions in districts where coronavirus cases have reduced drastically, CII president and Kirloskar Systems MD Vikram Kirloskar said that government and district officials could begin some economic activity even in containment zones by following protocols.

Q. At a time when cases are still rising and there is a reason to be cautious, what is the strategy that CII is presenting as an alternative policy action for the government to consider?

A. This is the third phase of the lockdown that India has entered into and it is extremely important to be mindful of the kind of economic impact that we are facing right now. Till now, it was extremely crucial to contain the spread of the virus and we laud the government’s efforts but it is now time to start manufacturing activity. Even in containment zones, we feel the district administration can play a vital role to identify those factories and manufacturing outlets where work can begin. Of course, social distancing norms need to be followed. In fact, we have issued detailed guidelines that must be followed to ensure work begins only in phases and with proper norms in place. Even this is a suboptimal option since productivity will be very low and will impact how plant and machinery is being utilised. But it’s important to start now since we cannot afford to be in this present state any longer. Don’t hesitate in opening since the impact on the economy would be very significant.

Q. How do you see this recommendation being received, especially since state governments are keen to extend the lockdown further despite economic impact?

A. It comes down to how the district administration handles the situation on ground. If there is intent, then it possible to start some factories and industrial units even in the containment zones. Industry feels waiting any longer risks us to go into a bigger economic crisis. It is important to think about the smaller industrial units—which are leveraged and have to pay staff salaries even in zero sales. Those units will not be able to survive like this. For instance, take the auto industry where there has not been a single sale in the month of May. Sales will start picking up only in June, which means there will be a washout for an entire quarter. Smaller auto component suppliers and smaller industrial units will have their backs to the wall if this present situation persists. Our recommendation is still very conservative as compared with other parts of the world. We are still suggesting partial beginning of economic activity with many restrictions, in fact the number of safeguards we have suggested will make running and operating the facility a very tough task. But it’s important to take that leap of faith right now.

Q. How soon do you expect economic revival for India, given the fact that the country was facing a slowdown even before the Covid-19 crisis hit the world?

A. It will be difficult to revive immediately. Also, given the fluidity and the number of headwinds that the global economy is facing, it will be difficult to make future projections. All I can say is that one quarter of the economy headed towards a wash-out, all depends on how soon we begin work and get back to running on full or almost full plant capacity. At this stage, the industry is in a phase of deciding short-term and immediate action plan.

Q. Around the world governments are trying to woo industry away from China. What would you want the Indian government to offer as reform? Would you have liked the government to be proactive in taking these measures?

A. Absolutely, the government must be more proactive to come out with more reforms. Industry will not come to India only because we wish it to. For India to be a part of global supply chain will mean a combination of factors—cheap and effective capital, labour and other reforms. India must be cheap and effective. Till that happens we cannot hope to be a significant beneficiary of the anti-China sentiment. We have seen how in the case of textiles, Bangladesh has become a bigger part of the supply chain and it is important to identify policy gaps and address them. The time to act is now.