With supplies from China dried up, importers of ceramics and plastics will find recluse in domestic manufacturers, reducing the import volumes and benefitting local makers.
While China’s coronavirus poses a risk to importers in the country as it has disrupted the supply chain, it might actually prove to be a boon for some domestic industries. With supplies from China dried up, importers of ceramics and plastics will find recluse in domestic manufacturers, reducing the import volumes and benefitting local makers, according to a CRISIL report. “India’s steel, paper, leather and textile readymade garments (RMG) segments have a window of opportunity to expand exports, as China’s own exports from these sectors account for a sizable pie in global trade,” the report added. India and China share crucial trade relations with export-import trade between these two countries (including Hong Kong) pegged at $115 billion in 2019.
However, sectors such as aluminium, electronics, and pharma bulk drugs are likely to be worst hit by the coronavirus pandemic as they won’t be able to fill the void created by halted China supplies. For these particular sectors, India is either running at peak utilisation or faces capability issues. “Other countries including India do not potentially have the scale or size to take material advantage of the opportunities available … It could take significant resources and time to set up additional capacities, by which time China itself might re-commence production,” the report said.
Earlier, trade body CAIT had also raised concerns about chain supply disruption as India depends heavily on raw material and other key ingredients supplied by China. Sectors such as consumer durables, electronics, solar panels rely mostly on imports from China and there are no immediate alternatives available to industries in India. Also, China is a major export market for India with about one-tenth of its exports meant for China. India ships several products to the country with gems and jewellery, mineral and ores, organic chemicals and sea food being the most shipped products to the neighbouring country.