India ranks among the top manufacturing destinations in the world, with the sector contributing to nearly 17 per cent to India’s GDP and employing  about 12 per cent of the country’s workforce.  Under the current lockdown, only drugs & pharmaceuticals and food processing industries are allowed to operate. These two industries contribute only 26 per cent of the total Indian manufacturing sector.

One of the biggest dilemmas that the country will face in the near future is: should the rest 74 per cent of manufacturing units be allowed to operate, and how? 

Opening all factories together could pose a higher risk in regulating these factories and controlling the transmission of the virus. A gradual and progressive mandate to allow the factories to operate in phases rather than simultaneously is recommended. There are two different approaches which could be followed. 

One could be to open industries with the highest weightage in the manufacturing sector i.e., the automobile industry which contributes 24 per cent of the total sector. The other could be to open a consortium of diversified industries i.e., electrical equipment, cement, textile and electronics, collectively contributing to 19 percent of the total manufacturing.

One major risk of opening factories is that a lot of labour would have to migrate back to the cities again. This would cause a number of problems as social distancing cannot be ensured. One of the ideas to deal with this could be that states run multiple buses on low capacity to ensure social distance is maintained; the price that the labour has paid to go from industrial towns to their hometown is very high. According to anecdotal evidence, the cost of going from Delhi to some parts of eastern UP is more than INR 5,000 per person and that too in very uncomfortable circumstances. Despite that, there is a very high demand for this service. If the states were to run buses, there would be a deluge of people wanting to avail this service. 

On one hand, when labour migrate, they migrate lock, stock and barrel with other people. It would not be possible to distinguish between a homemaker and an unskilled worker. While on the other hand, even if you open 10 factories, labour that pertains to 50 other factories would also move thinking that their factories would also be opening soon or have already opened; they could also move thinking that if their factory does not open, at least they can get work in the other open factories. 

Moreover, once those factories commence and successfully deploy the semi-skilled labour, there shall be various other operating challenges faced by the management of such companies. As soon as the guards of social distancing are lowered, the workforce shall face the immediate threat of contracting the virus. Health check-up processes will have to be put in place stringently with measures of quarantine/self-isolation/hospitalization for smooth functioning and immediate action against any community spread. 

Secondly, the manufacturing unit may not be able to operate at the level they were operating as earlier; to ensure a smooth transition and limit the spread of the virus, factories could be divided into different buckets requiring them to a follow a schedule to operate only on selective days. For instance, Factory A and Factory B are in a city. Factory A shall operate on Mondays, Tuesdays, and Fridays whereas Factory B shall operate on Wednesdays, Thursdays and Fridays. Additionally, there could be different time slots for the workforce so that the entire workforce is not exposed at one time. Example: 50 per cent of the workforce of Factory A could work from 10:00 AM to 1:00 PM and the other 50 percent could work from 1:30 PM and 4:30 PM, with 30 minutes allocated to sanitization. 


We are India's national investment facilitation agency.


For further queries on this subject, please get in touch with us @Invest India.
Raise your query