As Maharashtra prepares for a two-week lockdown beginning April 15, automotive companies are seeking clarity if their factories can be kept operational as per the guidelines issued by the state.
On April 13, the Uddhav Thackeray-led Maharashtra government announced a lockdown notification, which included guidelines for the manufacturing sector. As per the notification manufacturing units can be kept operational but with a reduced workforce.
“Units that require processes that are of such a nature that these cannot be stopped immediately and cannot restart without considerable time requirement, may continue with a maximum 50 percent workforce at any given point of time,” stated the notification.
The notification, however, did not clarify the sectors that can benefit from this clause. Automotive plants cannot be shut suddenly and likewise cannot be restarted immediately, several automotive company executives noted.
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Maharashtra houses no less than a dozen automotive plants, including those of Tata Motors, Mahindra & Mahindra, Volkswagen, Bajaj Auto, Skoda Auto, Mercedes-Benz, Jaguar Land Rover, Fiat Chrysler, Piaggio Vehicles and Force Motors.
In addition, there are at least six construction equipment producing plants that make cranes, road levellers and excavators, as well as some tractor making units and several auto parts plants that make tyres, windshields, and steering mechanisms to name a few.
“We are trying to make sense of the guidelines and seeking clarification from the authorities,” said Gurpratap Boparai, Managing Director, Skoda Auto Volkswagen India.
Another European automotive company said there has been no notice served from the local administration requiring that production be shut. This company intends to keep production rolling as usual.
Mercedes-Benz and M&M said they need clarity from the government before deciding on production. Tata Motors was yet to respond to a mail sent by Moneycontrol at the time of publishing this article.
The State government’s notification also has a provision for export-oriented units. “Export-oriented units shall continue to operate that need to fulfil export obligation,” the notification stated.
Asked if the company would keep its plants open, Rakesh Sharma, Executive Director, Bajaj Auto, said: “There are certain provisions like export obligations that offer a window to continue operations.” Pune-based Bajaj Auto is India’s largest two-wheeler exporting company.
The notification further stated that those companies whose manufacturing units accommodated labour within the campus could continue to operate but the workforce could not leave the campus.
“All the units that provide accommodation to their labour, working either in the same campus or in an isolated facility from where movement may happen in an isolated bubble with only 10 percent of managerial staff coming from outside may continue to work. Movement of the staff outside the premises is not allowed till the end of this notification. Such units may operate in various shifts as required,” the notification added.
These restrictions to contain the rapidly proliferating coronavirus have been imposed by Maharashtra, by far the worst affected State in India, at a time when the automotive sector is witnessing a robust surge in demand. The curbs will most likely impact production, leading to extended waiting periods.
Automotive plants in Maharashtra produce vehicles that are in high demand. These include the Tata Nexon, Tata Altroz, Tata Safari, Mahindra Thar, Mahindra Bolero, Mahindra XUV300 and Bajaj Chetak to name a few.
Skoda Auto is preparing to launch its first mid-size SUV, Kushaq, made at its Chakan plant, while parent brand Volkswagen is readying its new Tiguan as well as the Taigun for introduction.