Coronavirus – The Window of Opportunity to India
By the time you are reading this article, at least 1 person somewhere around the world would have tested positive of COVID-19 aka Coronavirus infection. Because of this viral outbreak, the stock market has crashed, oil prices plunged and our Indian folks are fighting over face masks and sanitizers. China and a few other countries including Italy is under complete lockdown. This unseen situation has disrupted the trade globally as many countries depend so much on China. One among them is India which largely sources electronics, engineering goods, and chemicals from China.
Since China is busy fighting the virus, imports and exports tumble as China merchandise export share in total world exports was 12.8 per cent in 2018 while its share in imports of merchandise goods was 10.8 per cent. Even our own Ritchie Street, India’s second-largest electronic market is feeling the impact of this global pandemic.
As most of the products and spares available in Ritchie Street are from China and Korea, this downfall has affected around 2500 shop owners. The shortage of imports from China additionally affected the local manufacturing units who source their raw materials like capacitors, circuits, and spares for their production. This would show a great force on prices because of more demand and less supply.
Due to the Coronavirus outbreak, cargo volumes up at the ports. Many containers were stranded at Chennai ports as many offices in China were shut and documents couldn’t get clearance. This condition imposes extra charges on the trader since after a container gets to the port, the person should file the BoE within a day, failing which they have to pay a penalty of ₹5,000 for the first three days and ₹10,000 for every day after that. BoE shows information about goods in the container, like its type and quantity and where it came from.
Do you think this state of affairs will offer a window of opportunity to India?
Yes, it will. Either India can replace the place of China by attracting global buyers or it can make use of China’s demand for imports from other countries since local production is affected. But the former can’t happen overnight, but if we start doing it now we will be able to do it soon.