India trade hit by USD 348 mn: UN report

The union technology ministry has asked electronics and smartphone industry lobby groups to draw up a list of components made in China which then can be airlifted, two of the officials said. China is slowly getting back to work after an extended shutdown, but it is still grappling with a range of production and logistics delays.

Electronics manufacturing, especially the assembly of smartphones, is a bright spot for India’s otherwise flagging economy. But the country is still highly dependent on China for components such as camera modules and display screens. The emergency airlift plans underscore the interconnected nature of global supply chains and the continued dependence on China for key goods even as some manufacturers - prompted in some cases by the US-China trade war - move to build up capacity outside of China.

Other industries are also exploring airfreight options

The Automotive Component Manufacturers Association of India has reached out to its members to assess which parts are in short supply and can potentially be air-lifted, as per a source. Auto industry relies heavily on China for parts such as electronic components, pressure sensors and fuel injectors. India’s embassy in China is also helping coordinate an airlift of drug ingredients from China, said a government adviser with direct knowledge of the matter.

For the electronics and smartphone components, the technology ministry “is in touch with aviation carriers and air freighters and they’ve been connected with the industry,” one of the government sources said.

The airlifting of components from the Chinese cities of Guangzhou and Shanghai is one option being discussed, the official said. The sources did not say when the airlifting might begin. The aviation ministry did not immediately respond a request for comment. Lack of truck drivers, a proliferation of road checkpoints and a shortage of workers at Chinese ports have slowed shipments even for parts that are still being produced, Reuters has reported. Air cargo firms have also reduced services in response to crew health concerns and uncertain demand.

China is India’s biggest trading partner, but India’s imports of Chinese goods contracted in February to their lowest levels in nearly four years, review of trade ministry data showed.

Smartphone makers have largely weathered the virus crisis, partly as they had built up inventories of Chinese-made parts to cover the Lunar New Year holiday period when China’s factories close down. But those stocks could dry up soon. SN Rai, the co-founder of home-grown smartphone maker Lava, said the supply of some components had resumed, but the pace of production at his factory on the outskirts of New Delhi could soon slow down.

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The trade impact of the coronavirus epidemic for India is estimated to be about $348 mn and the country figures among the top 15 economies most affected as slowdown of manufacturing in China disrupts world trade, according to a UN report.

Estimates published by United Nations Conference on Trade and Development (UNCTAD) said the slowdown of manufacturing in China due to the coronavirus (COVID-19) outbreak is disrupting world trade and could result in a $50 bn decrease in exports across global value chains.

The most affected sectors include precision instruments, machinery, automotive and communication equipment. Among the most affected economies are the European Union ($15.6 bn), the US ($5.8 bn), Japan ($5.2 bn), South Korea ($3.8 bn), Taiwan Province of China ($2.6 bn) and Vietnam ($2.3 bn).

India is among the 15 most affected economies due to the coronavirus epidemic and slowdown in production in China, with a trade impact of $348 mn.

The trade impact for India is less as compared to other economies such as EU, the US, Japan and South Korea. Trade impact for Indonesia is $312 mn. For India, the trade impact is estimated to be the most for the chemicals sector at $129 mn, textiles and apparel at $64 mn, automotive sector at $34 mn, electrical machinery at $12 mn, leather products at $13 mn, metals and metal products at $27 mn and wood products and furniture at $15 mn. “Besides its worrying effects on human life, the novel strain of COVID-19 has the potential to significantly slowdown not only the Chinese economy but also the global economy. China has become the central manufacturing hub of many global business operations,” UNCTAD said.