COVID-19:-ECONOMIC CRISIS

BY- SAMAIRA GULERIA

India is among the 15 most-affected economies due to the coronavirus epidemic and slows down in production in China

The trade impact of the coronavirus epidemic for India is estimated to be about 348 million dollars and the country figures among the top 15 economies most affected as the slowdown of manufacturing in China disrupts world trade, according to a UN report.

For India, the trade impact is estimated to be the most for the chemicals sector at 129 million dollars, textiles and apparel at 64 million dollars, the automotive sector at 34 million dollars, electrical machinery at 12 million dollars, leather products at 13 million dollars, metals and metal products at 27 million dollars and wood products and furniture at 15 million dollars.

We also can’t ignore that most of the Indian companies are located in the eastern part of China. In China, about 72% of companies in India are located in cities like Shanghai, Beijing, provinces of Guangdong, Jiangsu, and Shandong. In various sectors, these companies work including Industrial manufacturing, manufacturing services, IT and BPO, Logistics, Chemicals, Airlines, and tourism.

Let us have a look at the sector-wise impact on Indian industry

Chemical Industry: Some chemical plants have been shut down in China. So there will be restrictions on shipments/logistics. It was found that 20% of the production has been impacted due to the disruption in raw material supply. China is a major supplier of Indigo that is required for denim. Business in India is likely to get affected so people securing their supplies.

Shipping Industry: Coronavirus outbreak has impacted the business of cargo movement service providers. As per the sources, per day per vessel has declined by more than 75-80% in dry bulk trade.

Auto Industry: Its impact on Indian companies will vary and depend upon the extent of the business with China. China’s business no doubt is affected. However, current levels of the inventory seem to be sufficient for the Indian industry. If the shutdown in China continues then it is expected to result in an 8-10% contraction of Indian auto manufacturing in 2020.

Pharmaceuticals Industry: Despite being one of the top formulations of drug exporters in the world, the pharma industry of India relies heavily on import as of bulk drugs. Due to the coronavirus outbreak, it will also be impacted.

Textiles Industry: Due to coronavirus outbreak, several garments/textile factories in China have halted operations that in turn affecting the exports of fabric, yarn and other raw materials from India.

Global financial shocks
As the world grapples with the coronavirus, the economic impact is mounting – with the G20 Finance Ministers and Central Bank Governors having a conference call on 23 March to discuss how to address the emergency.

Solar Power Sector: Indian developers may face some shortfall of raw materials needed in solar panels/cells and limited stocks from China.

Electronics Industry: The major supplier is China in electronics being a final product or raw material used in the electronic industry. India’s electronic industry may face supply disruptions, production, reduction impact on product prices due to heavy dependence on electronics component supply directly or indirectly and local manufacturing.

IT Industry: The New Year holidays in China has been extended due to coronavirus outbreak that adversely impacted the revenue and growth of Indian IT companies.

Tourism and Aviation: Due to the coronavirus outbreak, the inflow of tourists from China and from other East Asian regions to India will lose that will impact the tourism sector and revenue.

Aviation: Airlines have got a raw deal with the coronavirus outbreak. With travel and visa restrictions in place, the Indian aviation sector saw fares crash by as much as 40 percent on certain air routes. Several air carriers, including Vistara, GoAir, SpiceJet, have suspended international flights amid dwindling demand and fares.

Apparel: India exported $16.2 billion worth of garments in 2018-19. The apparel sector contributes to 43 percent of India’s textiles exports in value terms and enjoys 5 percent share in the country’s overall exports. The apparel sector is also the largest employment provider after agriculture and employs 129 lakh workers, 65-70 percent of which are women.

Gems and jewellery: Retail sales of gems and jewellery in India have tanked 80 per cent in the last 10 days as buyers are not going to retail stores. On the export front, business fear losses could go as high as 50 per cent amid movement restrictions.

FMCG(Fast Moving Consumer goods): Unlike most sectors, FMCG has been an unlikely gainer from the outbreak. Panic buying has increased consumption in the FMCG sector across the country. Consumers have been hoarding basic food items such as milk, curd, rice, atta, oil, and lentils, as well as personal care products such as soaps, hand wash and sanitizers due to fear of a lockdown.

E-commerce platforms have been complaining of running out of stocks of necessities especially products such as handwash and hand sanitisers.

So, now you may have come to know about coronavirus. An outbreak of COVID-19 impacted the whole world and has been felt across industries. World’s second-largest economy China became standstill. Its outbreak is declared as a national emergency by the World Health Organisation. In India, the impact may felt through supply chain disruptions from China and also as regional players, who imports from China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

Create your website at WordPress.com
Get started
%d bloggers like this: