Impact of Coronavirus Outbreak on Export & Import of India

By Cogoport | 06 Mar 20 | Read Time: 3 minutes
Impact of Coronavirus Outbreak on Export & Import of India

Since the 2003 SARS, Indo-China trade has grown 18 times to $87 billion in 2018-19. One-third of India’s imports come from China. China is an important market for India’s entertainment, aviation, and electronics manufacturing exports. Coronavirus outbreak represents a problem as well as an opportunity for India.

The Coronavirus has infected more than 89,000 people and caused more than 2,800 deaths in China and Hong Kong. The virus outbreak has become a major human tragedy that deserves our deepest sympathies and condolences.

Apart from the human impact, it is important to assess the impact of this virus outbreak on the Indian economy.

1. The growing Indo-China trade relations to incur problems with the Coronavirus breakout

India imports a tremendous amount of goods from the Chinese traders. Electronics, Machinery and organic chemicals being prime among it, a total worth of $42.6 billion dollars is imported. On the counterpart, a total worth of $7.8 billions including organic chemicals, minerals, fuels and cotton is exported as well.

India is also an exporter to China with major exports consisting of

  • Organic chemicals ($3.2 billion)

  • Minerals and fuels ($2.8 billion),

  • Cotton ($1.8 billion).

There has been a steady growth in trade relations between India and China. There is no doubt that the Coronavirus represents a threat to Indian importers and exporters. This will have an immediate impact on the monetary loss as well as the inbound relations that both nations possess. Yet, this crisis may well be a golden opportunity for ambitious and enterprising Indian businesses.

2. Mobile Phone manufacturers and related businesses in India to bear the brunt of the virus outbreak

India is exporter as well as an importer of electronic goods and products to China. Traditionally, Indian businessmen exported 6-8% of its electronics goods and Indian businessmen imported 60% of its yearly demand with China.

According to the Cellular Manufacturers Association of India, 80% of all components for a mobile phone come from China.

So, there will be a short-term impact of Coronavirus on India’s electronic manufacturing sector. Prices of mobile phones, televisions, and other electronic products may rise. Indian buyers may have to wait longer for delivery of their purchases.

The troubled economic time could have been worse in 2018-19 when India imported 57% of its electronic products from China. This has fallen to 37% in 2018-19, which means the long-term Corona impact on Indian businessmen will be manageable.

Impact of Coronavirus on Imports from China

3. Indian carmakers may face significant problems in auto and electrical components due to the virus pressure on already burdened Chinese manufacturers

Indian automakers import many electric and electronic components from China. The overall value of imports is not very high. But, Indian car makers may face a big problem because of the way automobiles are manufactured in the assembly line.

The auto assembly line will work only if all the required components to make the car are in stock. Absence of even one component can bring the entire production to a grinding halt. So, the absence of an engine control unit or a fuel sensor due to delayed imports from China will create complications in the manufacturing process. can bring the entire vehicle assembly line to a stop.

Further, China is a significant market for luxury high-end cars. Coronavirus outbreak will impact Chinese demand for goods and services, which will be negative for companies like Tata Motors that exports its JLR cars to the country.

4. Manufacturing Industry can be impacted by health epidemics leading to many problems and complications

In 2018-19, Indian businessmen imported active pharmaceutical ingredients (API) and other medicines worth $2.4 billion from China.

Further, China is a big export market for Indian chemical manufacturers. Like electronics, India exports as well as imports chemicals from China. A long shut down due to the Corona outbreak could lead to economic and social problems in India.

Shortage of APIs may make medicines costlier. In extreme cases, there may even be a shortage of vital drugs and medicines in the country. This can be a very big problem if the Coronavirus begins to spread in India.

In every crisis lies hidden the opportunity to grow faster.

Disrupted imports can help Indian firms become self-reliant while exporters can expand into markets that were earlier served by Chinese firms.

There is no doubt that the Coronavirus has created a crisis for India. Yet, this may also be viewed as an opportunity. Imports can be substituted with Make in India. Indian businessmen can step up and offer their products and services to global companies facing supply issues in China.

Global efforts will bring the problem under control. If Indian businessmen can learn from this crisis and expand their domestic manufacturing and foreign client base, then the virus crisis may result in long-term benefits for the country.

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