Coronavirus fear keeps small traders at bay even as Chinese imports pile up

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March 5, 2020 8:09 PM

Trade, Imports, Exports for MSMEs: The novel Coronavirus impact is keeping traders at bay from markets leading to piling up of inventory of Chinese goods with importers ahead of the Holi festival.

The Coronavirus has also hit the probability of the revival of the Indian economy.

Trade, Imports, Exports for MSMEs: The novel Coronavirus impact is keeping traders at bay from markets leading to piling up of inventory of Chinese goods with importers ahead of the Holi festival, according to the traders’ body Confederation of All India Traders (CAIT). “As per an estimate, Holi-related Chinese goods worth about Rs 500 crore are lying with importers of Delhi, Mumbai, Bengaluru, and Chennai while Chinese goods of around Rs 3000 crore as per estimates are lying in supply chains across Country,” CAIT said in a statement. The “unnecessary panic across Country” is resulting in “gradual loss in business,” the body said which represents 70 million traders majority of which are micro and small businesses.

“Even the retail traders are least interested in procuring Chinese goods due to shifting in consumer behaviour,” Praveen Khandelwal, Secretary-General, CAIT said. Importers, which otherwise on regular business days, keep a buffer stock of 45 days to 60 days are seeing “indifferent attitude of both retailers and consumers,” he added, despite the existing stock being imported from China before COVID-19 broke. CAIT had sought set-up of a GoM by the government as the country depends significantly on imports from China. India’s imports from China reportedly stood nearly 14 per cent in FY19.

The Coronavirus has also hit the probability of the revival of the Indian economy even as it was trying to recover from the slowdown. “We believe a weaker China and global growth, and disruptions along the supply chain (China share in India’s goods imports was 14% in CY19) (Figure 10) are likely to have some adverse impact on India’s growth in the Mar-20 quarter. For instance, sectors such as electronics, pharma, automobiles, etc, could see supply disruptions in the value chain,” said Tanvee Gupta Jain, Economist, UBS Securities India.

Also read: Parliamentary Panel seeks priority clearance of MSME dues during resolution process; suggests this step

While for startup funding in Asia in 2019, which had remained sluggish largely due to the US-China trade tension, increased investors scrutiny before investing in startups, a slowdown in China’s economy etc., Coronavirus can further spoil it, taking a cue from outbreaks of deadly viruses in the past and their impact on startups. During the SARS outbreak between 2003 and 2004, private investments in Asia stood at 27 per cent and 29 per cent respectively below 2002 levels, according to CB Insights. Similarly, the investment activity in 2016 because of Zika virus outbreak, in Brazil and the rest of South America, went down by 50 per cent vis-a-vis 2015.

“There will be some impact of around 10-20 per cent but it won’t be as high as 50 per cent because I expect they will contain it in two-three months. There may be a slowdown specifically in China but cannot say the same for other Asian countries,” Abhishek Goyal, Founder, Tracxn — a global startups tracker — had told Financial Express Online.

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