Major states still not allowing industries to reopen: FIEO to govt

Health workers wearing protective outfits seen in a street during ongoing COVID-19 lockdown in Kolkata. Photo: PTI
Four days after some industrial activity was allowed to restart nationwide, major states such as Delhi, Tamil Nadu, Madhya Pradesh, and Karnataka continue to deny industry permission to reopen, exporters have told the government.

In a letter to the commerce department, the Federation of Indian Export Organisations (FIEO) said these states have not provided the promised relaxation in lockdown from April 20, even in the safe zones. Others are yet to issue standard operating procedures based on which industry will evaluate its preparedness before applying for permission, the FIEO said.

The body also pointed out that with the majority of industrial townships nationwide continuing to remain in the high-restrictions red zone, exports remain slow. This includes Mumbai, Pune, Hyderabad, Ahmedabad, Bhopal, Indore, Kanpur, Agra, and Varanasi, among others.

India’s exports contracted by 34.5 per cent in March, the steepest monthly fall in at least 25 years, as overseas demand remained lacklustre because of the coronavirus pandemic.

Manufacturing woes

Even in areas marked as green zones and rural areas, manufacturing has not started as ancillaries providing important components and raw materials remain cut off, the FIEO said.

In auto clusters, firms are saddled with stocks of finished products which need to be removed before production can start. However, these goods have remained in place because of logistics challenges and the collapse of the distribution chain.

Lack of requisite capital has also stopped many micro, small and medium enterprises (MSMEs) from purchasing raw materials and other inputs. The FIEO also reported crippling labour shortages across industries that have shut transportation activities, thereby also deterring units from opening.

Lack of consistency

It also flagged a lack of consistency by state governments in allowing units to open.

In Karnataka and Madhya Pradesh, industries that were ready to open had to change plans after the state government withdrew the permission. This has affected the plans of exporters in sectors such as engineering goods, apparels and gems and jewellery who desperately want to push out shipments before their orders are cancelled.

With more than 50 per cent of export orders currently getting cancelled, the export sector is expected to see massive job losses estimated at over 15 million, unless a targeted economic relief package is announced soon, FIEO President Sharad Kumar Saraf recently said.

Difficulty in sourcing raw materials has also hit food processing units that have reported that village panchayats have barred outsiders from entering their areas to conduct business. The cashew industry is also affected as the agricultural produce market committees that it sources goods from have shut down.

Legal tangle

Exporters have also pointed out several restrictions imposed by the home ministry on how factories should run. Rules mandating that companies provide transportation to employees in a dedicated vehicle or keep workers within the premises or in the adjacent buildings have attracted the ire of small businesses that say they neither have the capital nor the resources to abide by the guidelines.

“If workers are allowed to use their cycles or two-wheelers it can solve the problem of many units. Since state buses are not generally plying, such buses may be given to manufacturers for transportation on reasonable charges. It will be a win-win situation,” said Ajay Sahai, director general of FIEO.

The government also requires businesses to provide medical insurance to workers. However, the FIEO says often most workers are supplied by a contractor. Since workers on payroll have Employees' State Insurance facility and contract worker may be covered by Ayushman Bharat scheme, this requirement needs to be looked into, the body said.


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