Editorial

The sector that is under severe stress is the electronics industry. A significant share of inputs required in electronics components manufacturing has traditionally been sourced from China. As fresh cases of COVID-19 raise fears of a global pandemic, the impact for the shutdown across China has started to hit Indian businesses, some very severely.

With the province of Hubei and eastern parts of China taking a big hit, key industries in India that depend on imports, are coming to a halt. The story is not that bad for India's exports to China, but imports to several industries are feeling strain. According to Crisil, about 18% of India's merchandise imports are from China. India had a trade deficit of $159 billion as of calendar year 2019 and it remains a net importer from China (including Hong Kong) of $56 billion. In this backdrop, the worst hit are industries in electronics, consumer durables, auto components and pharma.

The crisis is now across the value chain. There are thousands of electronics manufacturing services manufacturers bought from India, and now their supply chain is, in turn, affected. from mobile phone to PCs to set-top boxes and inverters are being affected.

Another sector that has massive levels of 'essential Imports' is the leather goods manufacturing sector. There are many global buyers who strictly adopt the practice of nominating China based suppliers for their final orders that are made here in India. So such orders will be negatively impacted.

If dwindling imports have led to a crisis situation across many sectors, some in exports are expected to benefit. India will now be looked upon as a short to long term option. India is poised to gear up for production in the short-term with the low-end and medium-end products are expected to benefit well. Carpets benefit and so will furniture and handicraft categories. If the situation continues this way, India's exports to see a 10-15% growth next year.

India’s furniture imports stood at $603 million 2018-19. Out of this, from China ; it was $311 million in the financial year.

The other main exporters to India include Malaysia, Germany, Italy and Singapore . China is the largest exporter of different kind of furniture in the world. According to estimates, China’s exports to India stood at around $1 billion. The government is likely to impose restrictions on imports of furniture with a view to boost domestic manufacturing and reduce inbound shipments of non essential items.