Pharma, solar and chemicals sectors wary of possible disruptions in raw material imports from China due to coronavirus outbreak.
Finance minister Nirmala Sitharaman said on Tuesday sectors such as pharmaceuticals, solar and chemicals have expressed concerns about possible disruptions in imports of raw materials from China due to coronavirus outbreak, and promised swift remedial measures after due consultations with the Prime Minister’s Office (PMO).
After a marathon meeting with representatives of key sectors, the minister, however, ruled out an immediate spike in prices of essential commodities, especially drugs, due to any such disruption. She also said it is too early to assess the precise impact on the Make in India programme. India’s exports to China, too, haven’t yet been held up. Even imports of raw materials from the world’s biggest merchandise supplier haven’t petered out yet. Supplies are only getting delayed in certain cases and necessary paperwork for customs clearances, etc, is lacking, she said.
The MSME sector wants the government to ask the banks to be flexible about repayments and guarantees, as its ability to produce on time is hampered by the delayed arrival of imported inputs.
China is India’s biggest supplier of intermediate goods, worth about $30 billion annually, across sectors, mainly in pharma, electronics, textiles and chemicals, according to an internal assessment of the Confederation of Indian Industry. Some of these businesses are seeking a cut in customs duties to soften the blow of relatively expensive imports of inputs from sources other than China, according to industry officials.
For instance, China accounted for 68% of India’s total purchases of bulk drugs and drug intermediates in FY19. Similarly, it makes up for about 80-90% of India’s imports of mobile phone components.
Sitharaman was addressing media after meeting representatives of various sectors, including pharma, textiles, chemicals, electronics and telecoms, auto, fertilisers, edible oils, health, tourism and food products, to review the potential impact of the coronavirus outbreak on supply chains.
Sitharaman said following up on Tuesday’s meeting, top officials of the finance ministry will consult secretaries of various ministries on Wednesday to firm up a road map to deal with the issue. Measures will then be announced after consulting the PMO.
There were no reports of a shortage of medicines or medical equipment; in fact, the pharma industry players present in the meeting sought the removal of a recent ban on exports of items such as clothing and masks, the minister said.
India’s goods purchases from China almost touched $52 billion in the April-December period of this fiscal, down only 3.6% y-o-y when the overall imports contracted by 7.7%. The main imports are those of certain electronics and electrical items ($15.4 billion), capital goods ($10.5 billion) and organic chemicals ($6.2 billion). India’s exports to China stood at just $13 billion in the first three quarters of this fiscal. Our key exports to the giant neighbour include some finished organic chemical products ($2.2 billion) and raw materials like iron ores and similar products ($1.7 billion).
Apart from the top bureaucrats of the finance ministry and industry players, Tuesday’s meeting was also attended by the secretaries of commerce and heavy industries; director general of foreign trade; representatives of the departments of pharma, telecoms, shipping, MSME and public enterprises, among others.