India to restart industry engine from April 20
By Kirtika Suneja, ET Bureau | Last Updated: Apr 16, 2020, 01.35 PM IST
New Delhi: The Narendra Modi administration on Wednesday took an important step towards resumption of normal economic activity by partially lifting restrictions on manufacturing and construction, and further eased movement of goods traffic from April 20.
Nearly 80% of India’s export units located in special economic zones, export oriented units (EOUs) and industrial townships and clusters could resume work in some form by April 20. Government officials say around 1,000 units in special economic zones (SEZs) could become operational.
The ministry of home affairs (MHA) on Wednesday set out detailed guidelines for partial resumption of economic activity with the nation divided into hotspot and non-hotspot districts. The ministry of health and family affairs has identified 170 hotspot districts — called red zones — with highest incidence of Covid-19, 207 yellow zone districts with some cases and 359 green zone districts with no cases in last 28 days. The new permitted activities can begin in these green zones, subject to permission from state or district administration.
While the industry will be somewhat relieved, many restrictions will remain in place, especially on factories, establishments and service industries operating within city and municipal limits.
All industrial activity in rural areas and outside municipal and city limits has been allowed, including manufacturing of essentials such as drugs, medical supplies and equipment.
Food Processing Units, Cargo Movement
Food processing units in rural areas have been allowed to resume. All cargo movement through road and railways has been permitted, including loading and unloading at major ports and land ports. Highway dhabas and restaurants will be allowed to remain open and movement of trucks has been permitted.
The government has also allowed construction activity to resume in rural areas and outside city and municipal limits and industrial parks, including those under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in another major decision that will impact rural livelihood and incomes.
Restrictions have been lifted on construction of renewable projects, and construction firms and real estate companies have been asked to resume work in places where workers are available on site and don’t have to be brought in from elsewhere.
“I am happy to see the notification by MHA. I am glad that this gives us some clarity on what could happen after April 20,” TV Narendran, MD, Tata Steel, told a television channel.
At present, around 400 units in SEZs which are in essential sectors such as pharmaceuticals producing PPEs and power are already active while 2,000-odd units in the information technology sector are functional but their employees are working from home. “In the first week beginning April 20, we expect 1,000 units to become active but that depends on many factors such as the kind of industry and if they can maintain social distancing,” said an official.
India has 232 SEZs with almost 6,000 units.
Development commissioners of SEZs have begun talks with industry, especially with nonoperational units, and the next 4-5 days will see extensive discussions on transportation, logistics and how labour can be used in a staggered manner. Once these talks are over, the units can come forward and state if they can observe those norms and requirements.
“These units will not become 100% functional. As of now, even the essential ones are working with 20% labour,” the official said, adding that the government will facilitate the opening of units within the prescribed rules.
As per Federation of Indian Export Organisations, around 80-85% exporting units, mostly in engineering, pharmaceuticals, electronics and chemicals, are likely to become operational with the government allowing manufacturing and industrial establishments in SEZs and export oriented units (EOUs), industrial estates and industrial townships to resume operations after April 20.
While units can restart work, exporters have suggested once-a-week pass for firms with Importer Exporter Code (IEC) so that they’re able to submit the required documents with banks for payments to get processed.
“Since in exports, documents are extremely important to show proof of delivery and negotiation, exporting companies having IEC number may be allowed passes for two persons, once a week, to collect documents from the office for submission to banks, shipping lines, courier companies,” said Sharad Kumar Saraf, president, FIEO.
SEZs and EOUs provide direct employment to more than 25 lakh people with investment of more than Rs. 5.5 lakh crore and contribute Rs. 7.87 lakh crore to India’s export basket, which is one third of total national exports.
“The guidelines now allow manufacturing as well while only exports were allowed earlier. However, they don’t provide clarity on domestic tariff area. We are waiting for states’ orders,” said a Kolkata-based engineering goods exporter.
As per another exporter, industry wants clear and simplified guidelines from states on areas where movement will not be allowed. "Only 5% of the units are in EOUs. Also, we will need around 7-10 days to prepare for our units to begin work such as cleaning and sanitising,” said EEPC India chairman Ravi Sehgal.
India’s exports in FY20 declined 4.8% to $314.3 billion, with a whopping 34.57% in March to $21.41 billion.
The MHA guidelines have also introduced important caveats with major restrictions remaining in place across the country. Domestic and international air travel will remained suspended till May 3. Road travel through buses and rail travel will not be permitted. Inter-district and inter-state movement of people will also be banned.
Restrictions have been lifted on all agriculture, horticulture and fisheries, providing a huge fillip to rural economy during the crucial harvest season. Work can also resume in plantations.
The government has allowed companies and units located in access-controlled SEZs, EOUs, industrial townships to resume work, provided they maintain social distancing norms, arrange transport and a place for workers to stay within the township.
Production at coal mines, oil and gas sites, refineries and units which require continuous process will be allowed, the government said. Manufacture of IT hardware will also be permitted while IT and IT services companies will be allowed to resume work with 50% strength. Work can resume in ecommerce firms and vehicles used by these firms have been allowed to ply. Courier services have also been allowed to operate.
India to restart industry engine from April 20
