Despite the 'Corona Outbreak' Exodus in India... SMEs Cannot Leave

Withdrawal of Expatriates Inevitably Hits Operations... Possible Business Suspension
Factory Operations Hampered by Consecutive Employee Infections... CEO Decides to Head to India
Delayed Sales Payment Collection Also a Problem... Banks Restrict Loan Financing

India is currently facing a worsening COVID-19 situation, with daily new cases exceeding 400,000. Hong Ki-young, head of the Korea Trade-Investment Promotion Agency (KOTRA) Mumbai Trade Center, stated, "Almost all hospitals have exceeded their capacity," adding, "Businesspeople are unable to leave the area and are securing oxygen tanks while waiting for the situation to pass."
[Photo by Yonhap News]

[Asia Economy Reporter Junhyung Lee] #Since 2008, the local subsidiary of construction machinery company A, which entered India, has employed about 10 Korean staff members. As the spread of COVID-19 worsened locally, the families of expatriates all returned home, but the employees have not yet been able to leave the area. A company official explained, "Expatriates are responsible for the local subsidiary, such as the head of the subsidiary, so if they are not here, the factory would have to be shut down," adding, "Manager-level employees inevitably have to be cautious about withdrawing."

Although the COVID-19 situation in India is deteriorating, domestic small and medium-sized enterprises (SMEs) operating locally are hesitant to make a quick decision to return home. Unlike large corporations with solid systems, SME expatriates are dispatched in small numbers mainly for management and supervision roles, so if expatriates withdraw, business operations inevitably halt. Companies operating in India are facing disruptions in factory operations due to confirmed cases among local employees, worsening financial conditions, and are suffering from multiple overlapping adversities.

According to the Export-Import Bank of Korea and the Korea Trade-Investment Promotion Agency (KOTRA) on the 6th, the number of Korean companies that directly invested in India over the past five years (based on newly established subsidiaries) reached 493, with cumulative investment amounting to 3 billion USD, indicating active local investment.

Will Business Sites Withdraw... Hesitant to Return Home

Expatriates of mid-sized and small companies such as Daekyo, AutoGen, and Hwacheon Kikong, which have local subsidiaries, are still staying in India and have not made plans to return home. Hong Ki-young, head of KOTRA Mumbai Trade Center, explained, "Many companies are still working from home and monitoring the situation," adding, "In industries like construction and manufacturing, where contact with locals is inevitable, confirmed cases among Korean residents are also increasing."

SMEs are hesitant to make a withdrawal decision because expatriate withdrawal could lead not only to business suspension but also to the closure of business sites. There is concern that the business foundation painstakingly built over the past few years could collapse all at once in an uncertain environment.

Hong said, "For SMEs with only 1 to 3 expatriates, the absence of expatriates causes significant disruptions in operating and managing local subsidiaries and sales," adding, "Once they return home, it is uncertain when they can return to India, and the soaring airfare prices add to the burdens."

Even if expatriates remain locally, damage is inevitable. Business sites with manufacturing facilities often cannot operate factories properly due to confirmed cases among locally hired employees. A representative from Hwacheon Kikong, a machine tool company, said, "Even if the employee is not infected, if a contact person tests positive, they cannot work, and there are many cases where local employees and their families are confirmed positive," adding, "It can be said that normal factory operations are difficult."

Delayed Payment Collection and Reduced Orders: Multiple Adversities

Given the situation, some company CEOs have decided to travel to India. Cho Hong-shin, CEO of AutoGen, an auto parts company, plans to visit India this month to assess the local situation and consider returning home together with expatriates. AutoGen entered Maharashtra as a manufacturing hub in 2019 and currently has two domestic employees stationed locally.

There are other adversities. As the Indian domestic market contracts, local companies are delaying payments, causing increasing difficulties in financing for companies. According to local sources, not only is payment collection delayed, but new and additional orders have also been reduced. A local official said, "Since COVID-19, banks have severely restricted loans due to concerns about non-performing loans, making emergency funding injections difficult," adding, "There are concerns that COVID-19 will spread further this month, potentially leading to a complete lockdown of economic activities."

Flights for expatriates and Korean residents are being secured sequentially. Earlier, the Ministry of Foreign Affairs announced plans to support the return of Korean residents with a total of 12 flights this month. Hong said, "Diplomatic missions and Korean associations are doing their best to secure return flights for residents," adding, "There are quite a few flights departing from major cities like Mumbai, Delhi, and Chennai this month, so there should be no major difficulties in returning."

Meanwhile, since the end of last month, India has been reporting an average of 300,000 to 400,000 new COVID-19 cases daily. According to international statistics sites such as Worldometer, India's cumulative confirmed cases recently surpassed 20 million, with cumulative deaths reaching about 222,000. Of these, approximately 57,000 deaths occurred last month.

This content was produced with the assistance of AI translation services.