Impact of cyclones on manufacturing firms in India

Abstract The impact of cyclones on assets and sales of manufacturing firms in India is examined econometrically using data on manufacturing companies for 2008–2019. We find that there is about a 4–6 per cent dip in sales and a 2–3 per cent dip in total assets of manufacturing firms following a cyclone incident in the district where the firms' plants are located. The fall in sales is bigger for relatively small-sized firms. For multi-plant firms with plants in different states, which are relatively bigger firms, the impact may be small or even negligible. By contrast, cyclones cause a fall in total assets for both big and small firms. The adverse effect of cyclones on sales and assets of manufacturing firms is relatively less for firms with a high trade-technology orientation. We also find that cyclones significantly raise the risk of business failure among manufacturing plants, more so among small plants.