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During Monday’s Asian session, Bloomberg came out with the news that India is considering to allow certain types of manufacturing and services to resume with restrictions to kick-start the economy and avoid job losses even as the nation plans to extend the world’s biggest lockdown to contain the new coronavirus outbreak.

The news relies on a letter from Guruprasad Mohapatra, secretary of Department for Promotion of Industry and Internal Trade (DPIIT), to Ajay Bhalla, his counterpart in the Ministry of Home Affairs.

Key quotes

Big companies, with proper sanitation and social distancing norms in place, in sectors such as textiles, automobiles, and electronic manufacturing should be considered to operate with 20-25 percent capacity.

The nation of 130 crore people is under a three-week lockdown in the biggest such restrictions anywhere in the world to check the spread of the Covid-19 pandemic.

The shutdown could be extended by another two weeks, crippling the economy and making millions jobless. The Federation of Indian Export Organisations has warned that the sector may face 1.5 crore job losses alone due to order cancellations.

According to the letter, industries which should be allowed to start with minimum manpower on a single shift include:

  • Heavy electrical items like transformers and circuit vehicles
  • Telecom equipment and components including optic fiber cable Compressor and condenser units
  • Steel and ferrous alloy mills
  • Spinning and ginning mills, power looms
  • Defence
  • Cement plants
  • Pulp and paper units
  • Fertilizer plants
  • Paints and dyes manufacturing
  • All types of food and beverages
  • Seeds processing units
  • Plastic manufacturing units
  • Automotive units
  • Gems and jewellery sector units
  • All units in special economic zones and export-oriented units

The DPIIT also recommended allowing:

  • Housing and construction activity
  • Manufacturing of rubber needed for healthcare
  • Timbre, plywood that provide packaging material to pharma companies
  • FMCG and other companies producing essential commodities

FX implications

The news fails to offer major moves amid the broad US dollar strength, due to the coronavirus (COVID-19)-led risk aversion, as well as Easter Monday holidays in most markets, except for India, China and Japan.