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The threat of input supply disruption from China is becoming very real for pharmaceutical, electronics and automobile industries due to the coronavirus-induced shutdown of factories in that country, Commerce and Industry Minister Piyush Goyal has said.
He is likely to meet industry representatives and export bodies on Thursday to discuss the economic impact of the rapidly spreading virus. The meeting was earlier scheduled last week but was deferred. “The Minister will discuss both the concerns of the sectors hit by falling imports of essential inputs from China as well as opportunities for exporters,” a person familiar with the matter told BusinessLine .
In a written reply to the Lok Sabha on Wednesday, the Minister said: “Indian Missions abroad have also been asked to explore the possibility of sourcing raw material for our production, in their respective countries.”
The Minister’s response comes after several industries raised the red-flag over the deteriorating situation.
Auto industry body SIAM said many automakers import about 10 per cent of their raw materials from China. “The disruption in availability of these parts is likely to critically hamper production across all segments, namely passenger vehicles, commercial vehicles, three-wheelers, and two-wheelers and will gravely affect electric vehicles,” said a statement issued by SIAM on Wednesday.
Impact on pharma, IT sector
Another major industry that relies on Chinese raw material supplies is pharmaceuticals. A committee has been formed by the Department of Pharmaceuticals to regularly review the availability of stock of Active Pharmaceutical Ingredients/Key Starting Materials and API-based medicines, and to suggest measures for their management.
With businesses of most of its key clients — airlines, retail, and oil and gas sectors — impacted by the coronavirus outbreak, growth for India’s IT services sector will be a big challenge the coming fiscal year, predicted former Infosys Chief Financial Officer V Balakrishnan.
Talking to the media, he said that the situation looked similar to 2008 (global economic and financial meltdown). “But the issues are different as we don’t know how long this is going to continue.”
“The Minister,” said the source, “has especially mentioned that the sectors hurt by the coronavirus should be present at the meeting so that there is a better idea of the extent to which they are getting impacted.” Simultaneously, the Commerce Ministry has been identifying items where Indian manufacturers can increase their production to step up exports for filling the supply gaps left by Chinese exporters.
According to a preliminary study, there are more than 500 products where Indian exporters can plug global supply gaps.
China is India’s top source. In 2018-19, imports from that country totalled $70.39 billion. China is India’s No 3 export destination with outbound shipments valued at $16.5 billion in FY19.
The number of people infected with the coronavirus in about 100 countries has crossed 115,000, with the death toll reaching more than 4,200. In India, the number of infected is now estimated at 60.
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