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With the escalating COVID-19 crisis in India triggering regional lockdowns, some Japanese businesses have been forced to halt production and bring staff members back to Japan.

Daily infections remain over 300,000 in India amid the nation’s second wave of the coronavirus, and the prospect of a quick return to business as usual appears bleak.

“The level of impact varies depending on the industry, but I think it’s quite significant overall,” said Yasuyuki Murahashi, director of the Japan External Trade Organization’s New Delhi office.

He said lockdown measures in many cities since April are hurting retailers, since nonessential retail activities have been effectively paralyzed. Also, restrictions have prompted manufacturers of cars and electronics to halt production to curb infections, while some factories have been diverting their industrial oxygen for medical use.

“This is really different compared to the lockdown that India went through last year … those manufacturing companies cannot make products even if they want to,” Murahashi said.

“At this point, it seems that the situation won’t really change for a while,” so the second wave of infections in India could leave a big scar on companies, he said.

Murahashi added that the recovery of consumption may be slower this time compared to the rebound seen after the lockdown imposed in March 2020, which was phased out from June. Because the COVID-19 situation is far worse now, what’s first and foremost in people’s minds is to survive the crisis by avoiding infection, leaving no room for them to think about what to do after the crisis subsides, he said.

One of the hardest-hit companies is Suzuki Motor Corp., which relies heavily on the Indian market with its Maruti Suzuki India subsidiary.

The automaker on Thursday withheld its earnings forecast for the current business year through March 2022 due to the hazy outlook.

Because of the lockdown measures implemented in dozens of states, “we are unable to present our production plan, as it’s unclear how (the COVID-19 situation) will improve,” President Toshihiro Suzuki said during an online news conference.

According to Suzuki, about 80% of its stores in India are now closed and the firm doesn’t know when they will be able to reopen.

A Maruti Suzuki India showroom in 2016. According to Suzuki, about 80% of its stores in India are currently closed and the firm doesn't know when they will be able to reopen. | REUTERS
A Maruti Suzuki India showroom in 2016. According to Suzuki, about 80% of its stores in India are currently closed and the firm doesn’t know when they will be able to reopen. | REUTERS

The automaker halted operations at its factories on May 1. They are scheduled to resume from Monday, “but we may have to delay that depending on the situation,” Suzuki said.

“We can’t sell our vehicles unless we produce and procure them,” he said.

Honda Motor Co. also suspended operations at its five plants that produce cars and motorcycles, while operations at Panasonic Corp.’s home appliance factory have also been halted.

In light of the crisis in the region, the Japanese government tightened entry restrictions Friday, banning foreign nationals who have traveled to India, Nepal or Pakistan in the 14 days prior to their intended re-entry. Japanese nationals will still be allowed to return to the country. The ban does not apply to those who left Japan prior to the rule change.

But even before the travel restrictions were in place, a raft of Japanese firms had been bringing their employees back to Japan, Murahashi said.

The Foreign Ministry issued an alert on May 2 and recommended its citizens in India consider returning to Japan temporarily, fearing they may not be able to receive proper treatment because hospitals there are overwhelmed.

Nippon Steel Corp. has already brought 30 Japanese workers who were in India back to Japan.

A spokeswoman for Nippon Steel said that since they can work remotely from Japan, their temporary return is not affecting their work.

The explosive number of infections may lead to a temporary setback for companies operating in India, but it’s unlikely to dampen their long-term plans in the emerging market.

“I don’t think business interest in India among Japanese companies is diminishing,” Murahashi said.

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