COVID-19 Lockdown in India: Only Negligent Companies to be Penalized

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  • The Ministry of Home Affairs clarified their lockdown guidelines by stating that only negligent employers will be penalized, in case an employee tests positive for COVID-19.
  • No legal action will be taken against companies in case a worker tests positive for COVID-19.
  • Meanwhile, industry still awaits a wage stimulus package as small and medium firms struggle with cash flows.

After Prime Minister Narendra Modi announced the extension of the nationwide lockdown until May 3, 2020, the Ministry of Home Affairs (MHA) issued a set of guidelines to allow certain economic activities, including partial resumption of operations for manufacturing units and industrial establishments.

However, one of the guidelines was misinterpreted as industry leaders believed that they would be liable to get penalized if their employees are found as testing positive for COVID-19. Now, the government has clarified this guideline – it has stated clearly that only negligent companies will be penalized.

In an official statement, the MHA spokesperson said, “The MHA guidelines are misinterpreted. Penalties under the Disaster Management Act, 2005, are applicable if an offence occurs with consent, cognizance or negligence of the employer.”

A media report quoted labor secretary Heerlal Samariya stating that he “agreed with the industry that employers should not booked by law enforcement agencies if their workers get COVID-19.” He further added that workplaces should practice social distancing norms and provide safe transport system for workers to commute from between work and home.

Wage stimulus package

While the industry waits for a second fiscal stimulus from the government, the labor ministry is said to be exploring the possibility of a stimulus package for the private sector to pay wages. This is being considered especially for the micro, small, and medium enterprises (MSMEs) as they are struggling with cash flows due to the pandemic, and are facing the prospect of having to lay off employees to sustain their business.

There is yet to be a confirmation on this.

On March 24, the government eased some financial, tax, and regulatory compliances for companies and individuals. On March 26, India unveiled its first economic stimulus package worth US$22.6 billion, that provided direct cash transfers and food security measures, offering relief to millions of poor people hit by the pandemic.


India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to india@dezshira.com for business support in India.

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