Impact of coronavirus on Indian industries

Impact of coronavirus on Indian industries

The outbreak of coronavirus in China comes at a time when the Indian economy is going through a difficult phase and the virus outbreak could make the slowdown worse. Let us have a look at how the outbreak has affected different Indian industries.

China closures may leave e-commerce shelves empty

Amazon and Flipkart, the country’s two largest web retailers, are likely to see an impact on overall sales due to the prolonged closure of factories in China on account of the coronavirus outbreak, analysts and industry insiders told ET. A supply crunch in smartphones, televisions, large appliances and consumer electronics, which comprise about half their gross merchandise value (GMV), would come on top of the slower growth in sales during the recent festive season compared with the previous year.

While the repercussions of a hit on the supply chain for electronic goods will be felt across sectors, online retail’s exposure to them is significantly higher. Other categories such as furniture, home decor, fitness equipment and toys will also get affected, as per experts, due to the supply shortage.

China shutdowns hit Indian electronics companies

Smartphone and consumer electronics companies in India said they were staring at production cuts and possible delays in launch of new products due to the coronavirus outbreak in China that has disrupted component supplies. China accounts for 75% of total value of components used in TVs and almost 85% in case of smartphones.

“Production will be badly hit. There will be at least 15-20 days’ delay in supply of components. We have closed our purchase office there. New product launches will be delayed. If this continues, there will be chaos since no company holds stock in large quantities due to fluctuating input prices and subdued domestic demand,” said Avneet Singh Marwah, CEO of Super Plastronics, the company that sells Kodak and Thomson brand televisions in India.

Surat diamond industry likely to face a loss of around 8,000 crores

The Surat diamond industry is likely to face a loss of around Rs 8,000 crore in next two months as Hong Kong, which is a major export destination, has declared a state of emergency due to the coronavirus outbreak in China. "The Surat diamond industry is staring at a loss of around Rs 8,000 crore for February and March, said Dinesh Navadiya, regional chairman, Gems and Jewellery Export Promotion Council. Polished diamonds worth around Rs 50,000 crore are exported from Surat to Hong Kong every year, he added.

Phone makers face an alarming situation

Future component supplies to Chinese brands such as Xiaomi, Vivo and Oppo look under pressure. While Apple now sources iPhone XR and 7 from India, their components come mainly from China. A top executive at a leading Chinese phone maker said, “We are very, very concerned. There are travel advisories for our staff (regarding travel to or from China), and even the incoming cargo is now being hit. While buffer stock is being used now, there is no clarity on how we will tackle a longish disruption in supplies.”

Companies such as Xiaomi, Vivo and Oppo have carried out an assessment of their existing stocks and supply chain, and are worried about arrival of the next batch of supplies. “It is a fluid situation, but all indications suggest that things may become difficult in the weeks to come when it comes to production at factories.”

Leading players in the auto industry worried as cornovirus hits businesses

The auto industry, while being self-reliant, is also worried as China has now started playing a significant role in the Indian market, especially as electric mobility starts picking up (largely in twowheelers).

MG Motors (a subsidiary of SAIC), which is enjoying a good run in India with vehicles such as Hector SUV and newly-launched ZS electric, fears the company may not have enough cars to dispatch to showrooms as supplies from China come under a squeeze. “It’s already a hand-to-mouth situation for us. If things don’t improve over the next six to seven days, we will be severely affected,” MG India MD Rajeev Chaba told TOI.

Spread of coronavirus affects Agra footwear industry

The outbreak of the deadly novel coronavirus (nCoV2019) in China has affected the footwear industry in Agra as supply of raw material from that country has stopped completely. Industry sources say raw material worth Rs 15 crore for manufacturing finished footwear is imported from different parts of China to Agra every month.

“Due to coronovirus outbreak, import of footwear component from China has completely stopped since January. This has affected manufacturing of finished footwear in micro units in Agra. Medium and large scale manufacturers maintain stock of components supplied from China. The footwear industry of Agra will suffer major losses if the situation does not normalise in the next one month,” said President of Agra Shoe Factories Federation, Gagandas Ramani.

Out-of-bounds China market hits Rajasthan businesses

Gems and jewellery, importers and manufacturers of furniture, stationery items, toys and other raw material traders based out of Rajasthan have been most affected by the outbreak of coronavirus in China.

“Now, there is no scope to replace parts of the machines if need arises. The impact will be significant if the virus problem continues to prevail. A significant part of the exports go to China and it will certainly impact the industry,” said Ashok Dhoot, vice-chairman, Centre for Development of Stones, a subsidiary of RIICO.

The travel and tourism industry is also losing steam as travellers from other countries have started cancelling bookings after nCov cases were reported in India. A tour operator said, “Visitors from other countries have also started cancelling bookings fearing that India might also witness a spread of the virus. While no cases have been found in Rajasthan, nCov cases in Kerala have made foreign tourists, who had plans to visit India, apprehensive.”

Low cost non branded garment trade in Bengal becomes victim of coronavirus

“As an immediate impact, retail level price has started shooting up with rapidly depleting inventory here. Even worse is uncertain long term impact in the supply side in China. We are highly worried as the trade has almost completely become dependent on them,” said Bijoy Saha, a wholesaler in Siliguri dealing with Chinese kid’s ware, caps, belts etc.

According to market insiders, to cater to near 1.5 crore rural people from 5 industrially backward districts around Siliguri, these wholesalers annually import items worth around Rs 250 crore.