Maharashtra COVID-19 restrictions: White goods output to halt in peak season; confusion over exports

New restrictions to combat the rapid spread of COVID-19 in the industrialised state of Maharashtra will force non-essential manufacturing plants to shut down until the end of April, which is a big blow for makers of white goods as this is the peak period for sale of fans, refrigerators and air conditioners.

Chief Minister Uddhav Thackeray has announced a slew of restrictions that will come into effect from 8 p.m. on April 14 as the states has the highest, and rapidly growing, number of infections in the country. The restrictions require non-essential manufacturing facilities to be shut down until April 30.

"Despite requesting to not have lockdown for manufacturing plants, the state government decided to halt production. However, we are better prepared than last year and inventory across companies is at 65-70 percent capacity," said the head of home appliances at an electrical goods firm.

Maharashtra has manufacturing hubs in areas like Ahmednagar, Pune, Nashik and Amravati. Consumer durables like fans, small kitchen appliances, refrigerators, air conditioners and allied raw materials are manufactured in these areas.

Confusion over exports

The state government said that export-oriented businesses could be allowed to continue but white goods makers are yet to get any clarity on which industries would be included in this exemption.

"April is the time when finished products are exported to South-East Asian markets. We are yet to get a confirmation on whether products in final stages of production could be completed to be sent for exports. If we aren't allowed to do that, consumer durables firms will face heavy losses," said the chief financial officer of a white goods firm.

The size of the white goods industry in India is estimated to be Rs 80,000 crore. Over and above this, Rs 8,000 crore-10,000 crore accounts for exports of fully built units to nearby markets like Nepal, Bangladesh and Sri Lanka.

In 2020, sales of white goods halved between April to July due to the strict nationwide COVID-19 lockdown that was imposed.

Online sales to be hit

With summer sales of appliances announced across e-commerce platforms, white goods makers fear sales being hit by the fresh restrictions.

The state government said that while e-commerce is permitted, only 'essential' e-commerce will be allowed for delivery. This would only include grocery and medicines.

"For customers who have placed orders online, we will be unable to deliver products for the next 15 days. This is because appliances have been excluded from the essential category. We are already starting to receive a few product cancellation calls," said the head of West at a pan-India appliance retailer.