COVID-19 and its effect on India

Covid-19 and its effect on India

The ramifications of the sudden outbreak of the COVID-19 infection in Wuhan in China have been felt worldwide. The disease has been so much disrupting in nature, because China is the second largest economy in the world, and serves as the manufacturing hub for scores of industrial spares, and FM CG items that industries and customers in other parts of the world buy. The global supply chain, so dependent on China, lies in tatters now, because thousands of factories there have shut down, and transport has come to a standstill. Export and import to and from China have been severely curtailed.

India buys a wide variety of items in huge quantities from China. The most crucial among the big list of Chinese items imported to India are electronic spares for smart phones, semi conductors, automobile spares, electric switch gears, and Active Pharmaceutical Ingredients  (APIs). When import of these are impeded, auto companies, drug manufacturers, and electronics goods factories feel the pain. With spares coming in trickle, the Indian factories are forced to curtail production. Anyone can guess how such disruption of Chinese imports hurts India.

The other area that hits India is the general reluctance of western tourists to avoid coming here. So, our income from tourism in the form of hard currency decreases. The economic pain for India is understandable.

The shutting down of the Chinese production units opens up some opportunities for India. For items like garments, sports goods, shoes, and toys, India can step in as the substitute supplier. This will be possible if India moves in quickly to seal deals with western buyers. For APIs, the closure of Chinese factories can lead to re-opening of India’s closed API producing units that had closed down due to Chinese Pricing pressure. All these opportunities will slip through our fingers, if we don’t take prompt action to convince international buyers that we can be an alternative source for their needs.

Analysts say export of commodities like iron ore to China will fall drastically. This loss can’t be compensated because there is no buyer in the whole world who can equal China’s capacity to buy.

No matter how we look at the danger posed by COVID-19, there is no way we can completely obviate the difficulties created by Chinese economy’s forced shut-down.

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