Evaluating Pandemic Measures

Industry experts share their views on the on-going second wave of Coronavirus’ impact on India’s growth momentum and economic recovery, and how much of a deterrent are the lockdowns and curbs on the manufacturing activities to the ease of doing business…

Bigger demand spurt for Automation

We have witnessed a phase-wise and more calibrated lockdown in the second wave compared to the sudden lockdown in the first wave. More than the lockdown, the economy will be hit by the spread of the virus as people have been affected as Covid has spread to rural parts of the country as well. As the cases are receding now and we are seeing positivity rate falling below 5 percent, the lockdowns must be lifted in a phase-wise manner to ensure the number of infections do not rise again. We might see some casualties in businesses which have stressed balance sheets. But we see a very strong revival from Q-2 in the economy. With a good chunk of population in the West being vaccinated, their economy is opening which will fuel the export-oriented sectors and the pent-up demand will drive up consumption in the domestic sector. The Government has also shown the intent to drive up infrastructure spending in the last budget and should continue the same path as the road to recovery has again been fractured due to the second wave. Also, after the first wave, there was a thought process that the worst is behind us, but the rate at which the second wave struck, it is clear now that the manufacturing and supply chain of businesses need to have the capability to absorb these shocks and still deliver the service levels. This will act as a major trigger for demand of Robotics and Automation. We saw a demand spurt last year due to this, hence expect a bigger demand spurt for Automation post the second wave.

Lives important than livelihoods

It has turned out that lockdowns are essential to curb the chain of infection beyond a certain limit. There is no alternative, and we must accept the impact that these lockdowns have on business and the way we run business. Also, manufacturing must be seen in the perspective of a full business cycle. In this lockdown, many states did take measures to ensure that utilities and other critical sectors operate without any hindrance.

Regaining growth momentum

When the lockdown was imposed for the first time in the country, there was a huge disruption in every sector. Industries were not able to settle with their regular work. Phase 1 of Covid-19 has dented the economy. While most industries were on the path to recovery, the second wave of the pandemic has derailed their momentum. However, it is also important to note that most Indian companies are going into this second wave with improved operating conditions and resources compared to last year. These companies had already adapted to the changes and digitalized most of the business operations.

India’s Manufacturing sector is playing a crucial role in the recovery phase of the Indian economy. The sector, which was impacted by labor shortage and lockdowns in the first wave, is now better equipped through several Government policies introduced for economic recovery. Companies are adopting alternative sources of supply and ensuring that the labor force continues to operate safely.

The container glass manufacturing industry is transforming during the pandemic, with new demographic conditions and new customer demands.

The Indian economy is gaining back its growth momentum now, and I believe that a quicker pace of vaccination will help in fast-tracking this recovery phase.

Opportune time for Indian Manufacturing industry

The Manufacturing industry is playing a crucial role in the economic growth of our country. The disruptions due to the pandemic in the industry are temporary. Manufacturing companies are now better prepared to tackle unexpected and sudden localised lockdowns by the states.

The Indian Manufacturing industry is also expecting huge investments as the leading international mobile phone manufacturers and automobile manufacturers have set up units in India and are also expanding production.

Significant drop in demand

As the Covid-19 cases continue to rise in the country, consumer sentiments have turned negative. The second wave could make matters worse if it goes on for a longer period than predicted earlier. We are on the path to recovery and each sector is doing its bit.

Economy to recover by year end

The pandemic could pave the way for India's much-anticipated entry into the Manufacturing sector. Businesses are taking several measures to insulate themselves from similar uncertainties such as identifying alternate resources of supply, cost control, operational efficiency, and use of technology for internal and external operations. The Government of India and the state of Karnataka have given the Aerospace sector permission to operate during the lockdown. The Government is aligned that the Aerospace sector is an essential sector similar to the global mindset. This will help India to continue to be competitive and play by global rules in the Aerospace sector.

I am optimistic that the economy will recover towards the end of this year. As the vaccination coverage grows, the economy will recover accordingly in different parts of the world. In North America and parts of Europe, vaccination coverage is growing. In Asia, China has already recovered, and India’s economy will depend on how soon we can get a significant level of inoculation done in the next 3-4 months.

Focused at creating value for stakeholders

Our country is going through a ferocious second wave of Covid-19, the scale of which has not been seen before. Although, the Government is focusing on mass vaccination drives and supporting the MSMEs, small businesses and working-class at all levels, several OEMs, automakers have been shutting down their manufacturing plants to curb the daily surge in the cases. While the economic impact of this massive second wave remains uncertain, we expect spending and activity levels to gain momentum through the year as the macro environment improves.

Talking about Maharashtra only, the state contributes 15 percent to the nation’s GDP. Halting the Automotive sector and Process industries is always difficult because restarting them requires a huge amount of time and energy cost. We saw a tremendous pickup in demand and consumer sentiment when industries started to pick up in the January-March quarter. At SKF, we remain focused on supporting our customers, staying disciplined on our strategic priorities, improving operating efficiencies and optimizing costs through digitalization efforts, faster execution and most importantly, investment in our people’s capabilities to create long-term value for all our stakeholders.

Manufacturing activities affected

Localized lockdowns equally impact manufacturing activities. We have six factories around the country. Many of our suppliers are based in Maharashtra. So, what happens in Maharashtra, impacts not just the SKF factory in Pune, it also impacts our factories in Ahmedabad, Haridwar, and Bangalore. Even our suppliers do not have clarity in terms of what can be opened, what is not allowed to be opened leading to increased disruption. Already 25 percent of all two-wheelers, four-wheelers, and commercial vehicles are made in this state. If you add the supply chain connections to the state, that number goes up tremendously.

Poonam Pednekar
Chief Copy Editor
Magic Wand Media Inc
poonam.pednekar@magicwandmedia.in