The Lockdown in India continues unchanged and will most likely be extended (at least partially). The first states have already announced that they will maintain the lockdown until at least the end of April.
Of course, this particularly hits manufacturing subsidiaries hard, as instruments such as: short-time working are not provided for in Indian labor law. What is still largely unknown, however, is the possibility of one Exemption to get.
Requirement for Covid-19 exemption
The prerequisite for this (as in other countries) is that you are either directly or indirectly active in relevant activities or product groups, which in India are defined as follows:
- Manufacturing units of essential goods, including drugs, pharmaceutical, medical devices, their raw materials & intermediates,
- Production units, which require continuous process, after obtaining required permission from the State Government,
- Coal and mineral production, transportation, supply of explosives and activities incidental to mining operations,
- Manufacturing units of packaging material for food items, drugs, pharmaceutical and medical devices,
- Manufacturing and packaging units of Fertilizers, Pesticides and Seeds.
It is worth pointing out that with this not just direct production is meant in the above sense, but apparently also exemptions are granted if Component deliveries in systems that could be subsumed under the above points (i.e. not only first tier, but also second tier). Ultimately, it's about the area of application for the end customer/final user.
Concrete examples of successful exemptions in recent days:
- Manufacturer of components used in laboratory equipment
- Manufacturer of door hardware supplied to an Indian contractor currently carrying out hospital construction projects
- Manufacture of machines to be delivered to a film manufacturer who now wants to produce films for use in medical centers
- Manufacturer of safety switches that are installed in control cabinets that can be used in building technology, including in hospitals and laboratories
Technical expertise increases the chances and avoids later problems
In order to restart production in India, companies (for each production facility) need appropriate exemptions, as do their employees in order to be able to travel from home to work. These are issued by local authorities (including the police).
Even if it is not mandatory, we recommend strengthening the argument with technical statements from appropriate experts/certifiers. And that for two reasons:
- We expect that many companies in India will make similar applications - all on the basis that they would manufacture products in accordance with the catalog above. Many will also try to do this for whom the criterion does not actually apply.
However, if you can document the correct assignment through a “neutral” third party, this would certainly be helpful as it would provide additional security for the officials who would have to approve the application. - In many cases, officials (e.g. the police) will not be able to check the correctness of technical statements. In such cases, there is of course a risk of corruption or coercion, even if government officials initiate an audit at a later date in X weeks or months and could then try to put your Indian subsidiary under pressure.
Using WB for an expert opinion
We therefore generally recommend that you document every process in which you deviate from the norm (i.e. use exceptional permits) in such a way that you can refer to expert opinions and appraisers and thus prove that the management has complied with its duty of care.
The challenge will be to motivate the experts/certifiers to submit the technical statement in such a way that this can be done without factory visits etc., as such are currently not possible in India. Communication and building trust with the appraiser will be very important here. We can help you with this because we have been working closely with recognized technical testing organizations in India for decades. We agree with Mr Volker Klosowski even has its own expert on this topic.
If necessary, intervention at the highest level helps
As already explained, the application for an exemption is made at the lower authority level. In some cases it can be helpful, such applications too "further up" to place it, for example with a state's department of economic affairs, to give more weight to the importance of your activities. In this case too, we can provide support through our networks and our own political access.
Possible steps for derogation
A possible approach would be:
- Consider the applicability of the above exemptions to your activities
- Support in preparing applications
- Organization of a corresponding “technical statement” from a recognized and suitable expert/certifier
- Identification and implementation of possible additional steps (at the political level)
Just talk to us and together we will clarify what options you have in India.
