Some consumer durables and electronics companies in India are increasing their inventory stock levels fearing potential supply chain disruptions due to the increase in Covid-19-related restrictions in China.
“Although we are mostly covered in coming months, we are increasing our minimum stock level 1.5 times to be ready for supply chain challenges that might there,” said Avneet Singh Marwah, CEO, SPPL, exclusive brand licensee of Thomson in India.
Consumer durables and electronics makers import a significant portion of their raw material and parts from China. For instance, almost 70% of television components are imported, over 60% of those for air conditioners and around 25% for refrigerators.
According to media reports, China’s factory activity shrank for the second straight month in November due to the Covid-19 restrictions and transport disruptions.
Industry executives say December and January are good growth months for the electronics industry in India because of year-end offers on products. This, coupled with continued disruptions in China, could affect the supply chain for India’s consumer durables makers, they said.
Blue Star managing director B Thiagarajan said China’s zero-Covid policy has been continuing for quite some time and the company has been coping with it by holding an additional one or one-and-a-half month’s stock to mitigate disruptions.
Kamal Nandi, business head and executive vice president at Godrej Appliances, said while the company is well-covered till early next year, it is holding regular reviews with suppliers. Recent reports also suggest China may soften its zero-Covid stance after protests from citizens, but without any sweeping changes.