Companies in India will need at least three to six months to return to pre-Covid levels of business activity, industry executives said, as weak demand, scarce labour, and differing local rules cast a cloud over the reopening of the economy.
The government on Saturday announced a phase-wise lifting of the lockdown that began on March 25 . In the first phase beginning June 8, hotels, restaurants and hospitality services will reopen, along with shopping malls and places of worship.
Mint reported on May 30 that Maharashtra will allow only essential and non-essential goods and service providers to reopen for now while shopping complexes and malls may have to wait. On Sunday, the Maharashtra government announced it would implement the Centre’s guidelines in easing the lockdown, except in containment zones. The state has over a thousand containment zones, primarily in the Mumbai Metropolitan Region. From June 3 , most activities can restart, provided social distancing and hygiene norms are practised, even as the state is effectively under lockdown through the month.
The Retailers Association of India (RAI) welcomed the lifting of the lockdown, and reopening of malls and other retail categories. “The biggest problem for us is the different rules for operation that are expected in not just between states but also at a local district, taluka or ward level,” said Kumar Rajagopalan, CEO of RAI. “Some places have odd-even rules for opening stores, others have restricted timings. Some local bodies say not more than five customers are allowed at one point in time, others say you cannot switch on air conditioning; even though it’s the middle of summer. We’ve been working with local governments to address these. They need to realise that if retail doesn’t work, industries get affected,” he added.
The manufacturing sector is expected to gain from the reopening, but a full resumption of operations may take time.
“In the auto industry, the easing will allow dealerships to open up in some areas and also help suppliers. Production, though, will depend on the demand in the market,” said Vikram Kirloskar, vice-chairman, Toyota Kirloskar Motors Ltd and president of the Confederation of Indian Industry.
“Demand is slowly picking up as construction activity is resuming,” said Deependra Kashiva, executive director, Sponge Iron Manufacturers Association. “But it will take at least another six months to return to pre-lockdown operating levels of 70-75% capacity.”
