Staff shortage in China due to rise in Covid-19 cases coupled with Chinese new year falling in January this year has impacted the supply chain for Indian electronics and other manufacturing industries.

While there is no shortage of components reported, the challenge is on the logistics front.

Electronics manufacturing industry in India is the most impacted, as majority of the components used in smart televisions, mobile phones and other electronic items are sourced from China. Arjun Bajaj, CEO, Daiwa TV and director of Videotex International said the supply chain disruption has impacted the entire manufacturing process, and the lead time for delivery is extended by 7 to 10 days after purchase orders are placed.

Also read: India is emerging as a climate tech hub

“Shipments are taking longer than expected to arrive, necessitating an increase in capital investment. In the second half of the month, Chinese new year is coming so the workers will go on a long holiday,” Bajaj said.

Neeraj Bahl, managing director & CEO, BSH Home Appliances (India & Saarc) said, “The challenges faced in the past two years have proved to be a learning curve so hopefully we’re better prepared this time, should challenges worsen. We are closely observing the situation and are hoping to see things getting better soon.”

Tarun Pathak, research director (devices and ecosystems), Counterpoint Research said that the issue is more around the logistics and not the component shortages. “The Chinese new year was coming and there was a surge in Covid cases already, so a lot of staff moved to their respective hometowns for the risk of lockdown hampering the new year festivities. The problem is centred around shortage of staff at ports, which is what is causing delays in shipments,” he said.

Electronics manufacturers said that it has become crucial to prepone orders for components from China to ensure timely shipments and avoid any kind of shortage or disruption in the supply chain.

However, the disruption in the supply chains faced in the last two years due to the pandemic has led several domestic manufacturing companies to reduce reliance on China, and build local supply chains, and expand the source base to other countries as well. Anil G Verma, executive director and CEO, Godrej & Boyce said, that after the first wave of the pandemic, the company focused on developing robust local supply chains.

Also read: Maharashtra power utility staff stir disrupts supply

“We have also upped our in-house manufacturing of components and entire products which we had earlier outsourced. Further, we have developed suppliers in geographies other than China to reduce our dependency on one sourcing location. For the imports from China, our stocking levels take such disruptions into account so that we are not caught by surprise. Over the last few years, we have invested heavily in expanding our manufacturing facilities,” he said.

However, according to Pathak, the problem faced this time may not be too prolonged and the situation should improve from second week of February, as the number of Covid-19 cases is on the decline in China, and staff shortage should streamline post the Chinese new year. “This is also a lean season back in India and the consumer demand is low at present, so I do not see disruptions impacting more than the levels we are at currently. There is enough inventory in the system to take care of the surge that may happen around the Republic Day sales, and post that supply chain situation should normalise,” he said.

In April-October FY23, India imported $60 billion worth of goods from China against $94 billion last financial year. Electronics components formed 47% of the share, second to organic chemicals.