Goa’s manufacturing stakeholders speak on the long road to recovery as the lockdown is relaxed
Corona has brought manufacturing activities and related industries in Goa, to its knees due to repeated lockdowns imposed all over India.
Much as manufacturing activity was one of the first to be released from lockdown restrictions, the local industry has a long way to go in order to recover from the ongoing pandemic.
Members of the Goan industry are of the opinion that it will be quite a while before industrial operations come back to normal.
The industrial wheel, not just in Goa, but India and many parts of the globe, has been brought to a grinding halt” Blaise Costabir, President, CII-Goa
President of CII-Goa, Blaise Costabir states that the Pandemic broke out all over the world much before it did in India, and though the government had sufficient time to act, they were busy with less important things to notice the incoming storm. By the time the Government decided to act, the only option was lockdown. Much as the state and the country are opening up now, Blaise says that, “The industrial wheel not just in Goa but India and many parts of the globe has been brought to a grinding halt. Now making it turn again is going to be a huge task, some industries will not start again and specific sectors – airlines, hotels, travel agencies to name a few – will be hard pressed to come back to life. Fortunately, trains are public sector in India and they can stop and start at will. The new SOPs like social distancing masks and hygiene requirements will add costs along with gaps in shifts etc. Transport will become more expensive and many will shift to personal vehicles thus increasing the traffic issues.” He also states that the biggest issue as far as restarting the supply chain goes, is the fact that trucks are stranded all over the country with no drivers available. “Where there is production, there are no vehicles; and where there are vehicles, there are no drivers. Given the varying SOPs at State borders, truckers prefer to stay home. This leads to a steep rise in the cost of goods”.
“The State Government has been supportive, but has not been able to meet any of our demands to manage our cash flows” Damodar Kochkar, President, Goa State Industries Association
Another issue that he points out to is the difficulties related to labour. “The sudden lock down put the daily wagers into turmoil. They were hard pressed to be able to feed their families. They had to depend on handouts. This pushed them to decide to return to their safe haven i.e home, no matter the difficulties faced by them in getting there. This led to a mass exodus of workers and the Government was forced to resume the trains, albeit a bit too late.” He feels that while the exodus was acceptable for some industries like hotels and shacks in Goa; but those dependent on labour like construction and farming will be the worst hit. Regarding the procurement of raw materials as well as supply of water and electricity to manufacturing units and industrial estates, Blaise maintains that it will take time for the situation to stabilize as many places are still locked down. “While the supply of electricity and water has been consistent during this period, the Government insists on charging at contracted demand despite the order to shut down industries. Now, post re-starting also work is not happening at full capacity, so costs are high. For example, hotels which are closed due to government orders; but they have to pay the full bill and the price of diesel has also been raised.
“Industries in Goa are facing excruciating pain on account of disrupted supply chain, displaced labour and most importantly, uncertain future” Pravin Kakode, Founder, Upgrade
At this juncture, Blaise maintains that the only way ahead is to stay optimistic and try out different opportunities when it comes to ones business. “Use the lull to analyse your portfolio of products, discard loss making items, find new product lines that would be necessitated by this situation, train your people. You will do well to find ways to reduce labour intensive operations, invest in low cost automation, see where IOT can be implemented in your business. If you do not have an ERP, get one as it will make sense; move to cloud to free your place of servers that need maintenance, and upgrades. There will be time use it well.”
Pravin Kakode, trade and manufacturing entrepreneur, says that “Uncertainty is a reality of life, but one like this, of such gigantic proportions, is unprecedented and will transform the way we live. Industries in Goa are facing excruciating pain on account of disrupted supply chain, displaced labour and most importantly uncertain future. The Government is surely very high on intention but I feel far more emphasis is needed on execution.” Pravin states that Goa was in a slowdown mode much before the pandemic and now coupled with the lockdown, matters have taken a very serious turn. Much as he is of the opinion that businesses slump during the monsoon, necessary steps have to be taken to remedy the situation, else there is a likelihood of several units winding up by the time monsoon ends. Pravin adds that the need of the hour is to rethink the way one runs their business. “I feel the need of the hour is to go back to the drawing board and rethink the way we do business, the way Government deals with business, the ‘ease of doing business’ in the true sense of the term.”
Damodar Kochkar, Managing Director of Ultratech Automotive; a first generation entrepreneur and, presently, President of Goa State Industries Association (GSIA), speaks on the outbreak of the pandemic across the world and its effect on the country and state. “The outbreak of the novel Coronavirus (COVID-19) has put the global and national economy into a crisis which is unprecedented in modern history. The lockdowns imposed in India from the end of March 2020 to contain the spread of the disease and closure of economic activity created panic and fear amongst the people.”
Damodar goes on to explain about lockdown stating that the initial lockdown forced closure of industrial activity, the supply chain of essential goods was disrupted and many daily wage earners lost their livelihoods. The migrant workers with no money and essential supplies were the most affected lot. At this hour of need, GSIA, with the assistance of all Industrial Estate Associations and support from the State Government, came forward to help the migrant workers by distributing essential supplies.
Regarding the status of industries in Goa after Covid-19, Damodar says “COVID-19 has completely disrupted economic and manufacturing activity globally as well as nationally. Goa was not an exception to this. Though Goa had few cases but the manufacturing activity depended on other States for the supply of their raw materials as well as for sale of finished goods. It was only under lockdown 2.0 that GSIA initiated a dialogue with the State Government to formulate a plan to restart industrial activity in Goa. Data was collected from all the industries which wanted to restart their activity with minimum workforce and agreeing to comply with all the requirements of the Government to control the spread of the Coronavirus. Travel passes were issued to the industries to restart the activity.”
Damodar then speaks about the various difficulties faced by industries when it comes to labour, procurement of material, logistics and supply of electricity and water during the lockdown period. “Though the Government has permitted to restart industrial activity, most of the industries could not function to their full capacity in the absence of their key workers and supply of raw materials. Also, transportation of finished goods was affected. Trucks with goods were held up for days together at various check posts. In these trying times, it was very difficult for the small industries to pay even their utility bills. Many of the industries had workforce from neighbouring states who could not come back to join duty due to lockdown. Standard Operating Procedure (SOP) was put in place to get back such stranded employees and GSIA assisted the Government to get back such employees to join duty. Supply of water and electricity was as usual but it was of no use without other inputs required for manufacturing activity like labour, raw materials and demand for produced goods.”
With regards to the support received from the Government, Damodar states that several demands were submitted to the State Government for revival of industries in Goa such as financial assistance to pay wages, waiver of fixed charges and duty on power bills, payment of pending dues to MSMEs, freezing of recently announced increase in VDA, introduction of 12-hour shift for manufacturing industries etc. “The State Government has been supportive, but has not been able to meet any of our demands to manage our cash flows.”
The Central Government EPF support scheme of 24% contribution by the Government under Pradhan Mantri Garib Kalyan Yojana (PMGKY) has not been of any help to industries in Goa. The salaries in Goa being higher than many other States, it is very difficult to meet the norm that 90% of employees should earn less than `15,000 as monthly salary. The GSIA has written to the State Government as well as to the Union Minister Shripad Naik to take up the issue with the Central Government and make the scheme applicable to all the employees earning less than `15,000/- irrespective of percentage of such employees in a company.
The announcement of `20 lakh crore stimulus package by the Prime Minister was a welcome move. Unveiling the details of the stimulus package, the Finance Minister said that 3 lakh crore collateral free loans will be given to the MSMEs out of total package of `20 lakh crore. The four-year loan with one year moratorium, with interest rate capped at 9.25%, fully guaranteed by the Government should enable MSMEs to kick-start their operations. However, this depends how proactive the banks will be to implement the decision at the ground level.
Damodar concludes with his thoughts on the way ahead after Covid-19. “It is difficult to predict the outcome of detrimental effect of COVID-19 on global and national economy till a permanent cure for the disease is found. Even if the virus is completely eradicated, it will take some time for revival of demand and supply of business. The negative effect will be much more on Goan industries as the raw materials as well as the supply of finished products depend on upcountry markets. The State Government should support the manufacturing industry as it is one of the main revenue earners for the Government after the closure of mining and setback to Tourism. We suggest that State Government should procure locally manufactured goods for all their requirements, provided that they match the quality and price to boost local demand.”
It is clear that the local industry has a mammoth task on its hands with regards to the recovery of production. It will take its time but revival is not impossible. Whether the industry recovers completely or no, depends on a lot of factors and unless the overall economy opens up it looks like an uphill task.
Hopefully, with the opening up of the country, baby steps are being taken in this direction and the industry will see a revival in the coming months
