From mobile phones, toys, pharmaceuticals to kitchen goods, traders in several sectors here say that the slowdown in trade activity with China, as a consequence of COVID-19, will soon start to effect business.
India’s trade and industry are highly dependent on China, says Praveen Khandelwal, general secretary of the Confederation of All India Traders, a body that has petitioned the Central government to bring in a special package to ease supply chain constraints arising out of the current issue.
Among three major reasons for this dependence, Mr. Khandelwal highlighted the import of finished goods for re-distribution, raw material for production purposes and the import of spare parts used in assembling goods.
“Since COVID-19 broke out in January, the trade and industry in China have been hampered and there is no msanufacturing or supply of goods. Because of the deadly virus, Indian importers have stopped importing goods from China and have cancelled their visits to China or other countries where there has been an outbreak of the virus,” said Mr. Khandelwal. While most importers tend to keep buffer stocks of about two months to tide over periods of low supply, a situation has now arisen where the supply chain will get badly affected now, he added.
The retail mobile trade, for instance, is almost entirely dependent upon China, said Arvinder Khurana, president of the All India Mobile Traders Association. While every month, old models of mobile phones would see a drop in prices as new models are supplied, in the current month, no such drop in prices has taken place and the supply of goods is being rationed by companies, said Mr. Khurana. “The market is on a bit of a wait-and-watch situation...we are hoping for things to improve by March 10,” he added.
In Pharmaceuticals, Ashish Grover, general secretary of the Delhi Drugs Traders Association, explained that a lot of raw materials used in the manufacturing of drugs, such as amoxy or para, were supplied from China. “Just as most other sectors, with trade from China at halt, raw materials are not being supplied,” he said. While as a consequence of this, there had been an upward correction in prices of goods, Mr. Grover noted that there was no shortage in supply of medicines. “After all it’s not like medicines from here are being sent to China or there is any emergency situation here” he said. Currently, it is unclear as to how many months of supply of raw materials the manufacturers had and the impact of the slowdown in trade from China would depend on whether or not alternative sources of supply are set up, he said.
In Sadar Bazar, where a wide range of items are sold, traders representative Devraj Baveja said that the prices of most of the goods had already seen an upward correction, and in some cases it is as much as 50%. “Many items, like belt buckles, Christmas lights, specific parts of gas stoves, are only made in China,” said Mr. Baveja. In many of these cases, sourcing the material from any alternative locations would mean much higher pricing. With various parts having stopped arriving from China, Mr. Baveja said, it would soon become hard to sustain. As a consequence of this, workers involved in the process, in assembly lines as well as in loading and unloading activities, would not be able to continue, he said.
The toy market sees nearly 80% of its demand met by products made in China, while only 20% is met by Indian manufacturers, said Ajay Agarwal, representative of toy manufacturers. With business activity with China having stopped, Mr. Agarwal said, Indian manufactuers are trying to ramp up production to meet demand. “The main problem is that we don’t have as many designs as they have in China,” he said, adding that for this purpose, R&D centres need to be set up.
However, Mr. Agarwal said that the effect on business had not been seen as of yet as most traders kept stocks worth two months at least. In any case, as in other sectors, Mr. Agarwal said, there was no clarity on how long the impasse would last and as other traders were also waiting and watching.