As coronavirus impacts trade, India looks to airlift components from China: Report

After airlifting supplies to and citizens from China, India is now looking to airlift vital components for its manufacturing industries in a bid to counter the negative effects that the coronavirus outbreak has had on supply chains. 

According to a Reuters report, the technology ministry has asked electronics and smartphone industry lobby groups for a list of components they need from China that can be airlifted. Other industries looking to get imports from China include the automotive and pharmaceutical sectors, both sectors that rely on Chinese imports of components and raw materials. 

A source “aware of the matter” told Reuters that the Automotive Component Manufacturers Association of India had asked its members to determine which parts are in short supply and that can be airlifted. 

Another source said that the Indian embassy in China was helping to coordinate airlifting of drug ingredients. 

A strong push to ‘Make in India’ has seen the smartphone industry grow by nine per cent in 2019 even as the Indian economy as a whole slowed down. Companies like Apple have sought to make India an alternative manufacturing hub to China, as they rely on local manufacturing to drop the price of their offerings in the Indian market. However, the electronics industry as a whole is still heavily reliant on Chinese imports. 

China is India’s biggest trading partner, and its trade surplus with India was $56.8 billion in 2019, according to the country’s General Administration of Customs. The coronavirus outbreak, however, has taken a toll on Chinese exports across the world.

A UN Body on Wednesday said that Chinese exports of vital parts and components had shrunk by two per cent, costing other countries and industries $50 billion, as a result of a global decline in exports. 

According to Pamela Coke-Hamilton, director of the United Nations Conference on Trade and Development (UNCTAD) division of international trade, "There is a ripple effect throughout the global economy to the tune of a $50 billion fall in exports across the world.” She added that that amount is only a conservative, preliminary estimate for the month of February.

The amount was based on the contraction in China’s Purchasing Managers' Index (PMI), which shrank to a record low of 35.7 in February from 50.0 in January—a steeper decline than seen even during the global financial crisis. 

A UNCTAD estimate placed the trade impact of the coronavirus outbreak on India to the tune of $348 million. According to UNCTAD, India was among the 15 most affected countries, with the worst-affected being  the European Union ($15.6 billion), the United States ($5.8 billion), Japan ($5.2 billion), South Korea ($3.8 billion), Taiwan ($2.6 billion) and Vietnam ($2.3 billion).

UNCTAD said because China has become the central manufacturing hub of many global business operations, a slowdown in Chinese production has repercussions for any given country depending on how reliant its industries are on Chinese suppliers.

“In addition to grave threats to human life, the coronavirus outbreak carries serious risks for the global economy,” UNCTAD Secretary-General Mukhisa Kituyi said.

 “Any slowdown in manufacturing in one part of the world will have a ripple effect in economic activity across the globe because of regional and global value chains,” he said.

Meanwhile, Taiwanese electronics giant Foxconn told investors on Tuesday that it expected to return production to normal seasonal levels by the end of March. Foxconn is a key supplier of parts for companies like Apple, Asus, Dell, Huawei and many others. 

With inputs from PTI