A worker in a protective suit checks the temperature of a man in Beijing. WHO has declared coronavirus outbreak a global health emergency.
File photo of a worker in a protective suit checking the temperature of a man in Beijing (Representational image) | ANI via Reuters
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New Delhi: In light of the coronavirus outbreak impacting China’s exports, India faces the risk of running out of supplies as the outbreak has resulted in the closure of many factories in China.

In 2018, China accounted for over 14 per cent of India’s imports. Traditionally, China slows down production from the last week of January to the Lunar New Year so the importers had stocked up. This has softened the blow to the Indian industry.

Ajay Sahai, director general and chief executive of the Federation of Indian Export Organisations told ThePrint, “If production commences in Chinese factories by mid-March, then we may be able to manage it. Beyond that, there may be supply chain problems and disruption may be in the offing.”

ThePrint looks at sectors that face the risk of running out of supplies in light of the production halt owing to coronavirus outbreak.

Electronic machinery / Mobile phones 

Electronic machinery accounts for 10 per cent of India’s total imports. Sahia said, “Electronic manufacturing is facing a challenge because they keep a lean inventory and most of the import takes place from China.”

Handset makers will be severely impacted. Rajan Mathews, director general, COAI (Cellular Operators Association of India) reportedly said, “The handset makers will be impacted more as almost 80 per cent of the components come from China.” The electronic manufacturing industry depends on chipsets, displays and batteries from China.

Apple also cut iPhone shipment forecast by 10 per cent due to the outbreak. Apple analyst Ming-Chi Kuo reportedly said, “Our latest survey indicates that the iPhone supply is being affected by the coronavirus, therefore, we cut the iPhone shipment forecasts by 10 per cent to 36-40 mn units in 1Q20.”

Sahai added, “At the moment, on the import side, challenges have come only from electronics, mobile manufacturing in particular. We have seen that many companies are postponing their shipments because they feel that even if they ship the goods, the clearance might not take place at the port as the factories have not started operating with full capacity.”


Also read: Why Indian students will want to study medicine in China despite coronavirus


Pharmaceuticals 

Chemical products and pharmaceuticals account for four per cent of India’s total imports. Indian pharmaceutical companies may also face disruption as key raw materials such as APIs (active pharmaceutical ingredients) are imported from China. The APIs are used for antibiotics, vitamins, anti-diabetes, anti-invectives.

According to a report by bulk drug manufacturers, as of 14 February 2020, many antibiotics witnessed an exponential surge in prices within a span of a month. Medicines like Azithromycin saw a 44 per cent increase, the price of a unit of Paracetamol increased by 72 per cent, an antibiotic called Nimesulide saw an increase of 167 per cent in a month.

Automobile industry 

India remains reliant on the Chinese industry for sensors, power controls, engine control units, motor and batteries. All of these are key to the supply chain of the Indian automotive industry which faces the risk of running out of inventory.

Sahni said, “Automobile industries normally have an inventory of two or three months at a time. At the moment, they may not be suffering, everything depends on how long this situation continues.”

Reports revealed that Hyundai shut down three of its South Korean plants owing to shortages of a wiring harness which wasn’t available from the Chinese supplier.

Toys 

In 2018-19, India imported Rs 1,828 crore worth of toys from China. The Indian toy industry’s heavy reliance on China may also result in a supply crisis.

Vipin Nijhawan, vice president, Toy Association of India (TAI) reportedly said, “China factories were shut for new year from the first week of January. The last time we loaded our containers was perhaps on 15th of January. Whatever containers that have been shipped from China, must have already reached India too. There will be no more arrivals for another three months now.”

Rubber chemicals

China accounts for 70 per cent of the world’s rubber chemical production. One of the few players in the rubber chemical business, NOCIL may be impacted as exports will increase owing to consumption curbs in China.

Dyes 

India and China are key major suppliers of dye intermediates. Therefore, there is a possibility of demand shifting from China to India. India’s dye intermediate players like Bodal Chemicals, Kiri Industries may benefit from the outbreak.

On the other hand, there is a possibility that the Indian industry may benefit from the outbreak in the long run. Sahai said, “One positive thing could be that many countries may be a little apprehensive or reluctant to import from China in the near future. The Indian government is also engaging with the stakeholders to get the details of the emerging opportunities and how we can quickly encash on it.”


Also read: Isolation, counselling, paracetamol — how Kerala is treating coronavirus patients


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2 Comments Share Your Views

2 COMMENTS

  1. Boycott China , Boycott every imports from China, Companies should invest over rural and villages to manufacture thier raw materials in india itself. Every element they need can be generated here. It’s the best time to explore new India.

  2. Often there is a hue and cry for banning import of products from China. Now nature has done this. Now Indian manufacturers should prove that they can make and supply those products at China’s price.

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