Coronavirus impact on India’s trade, construction, auto and pharma likely to be worst-hit

Abstract

India’s 28 percent of import basket is heavily dependent on China which is likely to be impacted by a potentially extended shutdown due to the coronavirus outbreak.

  • India’s 28 percent of import basket is heavily dependent on China which is likely to be impacted by a potentially extended shutdown due to the coronavirus outbreak.

  • India imports 40 percent of its electrical machinery from mainland China. Including Hong Kong, its share in India’s electrical machinery goes up to 57 percent.

  • China accounts for just 5 percent of India’s total exports. India’s main exports to China are mineral fuels, organic chemicals, and cotton.

  • India’s 28 percent of import basket is heavily dependent on China which is likely to be impacted by a potentially extended shutdown due to the coronavirus outbreak.

    Electrical machinery, mechanical appliances, organic chemicals, plastics and optical and surgical instruments collectively amount for 28 percent of India’s import basket, ICICI Securities said in a report.

    India imports 40 percent of its electrical machinery from mainland China. Including Hong Kong, its share in India’s electrical machinery goes up to 57 percent.

    “Hence, if coronavirus leads to extended shutdown in mainland China and Hong Kong, over half of India’s electrical machinery imports are likely to get impacted,” ICICI Securities said.

    Similarly, India imports almost one-third of its machinery and mechanical appliances from China. The next three largest exporters to India viz. Germany, US and Japan also depend on China heavily for machinery imports. Hence, a prolonged shutdown in China is likely to put 30-40 percent of India’s machinery imports at risk, the report added.

    Further, organic chemicals are also expected to be among the worst-affected import commodities due to the crisis in China.

    India imports close to 40 percent of its organic chemicals from China. The second and third largest import source countries viz. US and Singapore also depend on China to varying degrees. Hence, the impact of Coronavirus-related shutdown on India’s organic chemical imports is likely to be high.

    The report also stated that the imports of plastic and optical and surgical instruments will be impacted although to a lower extent. India imports 18 percent of its plastics and 16 percent of optical and surgical instruments from China.

    The sectors which are likely to be worst-affected by the possible shutdown in China are construction, transport manufacturing, chemical manufacturing and machinery manufacturing.

    Meanwhile, China accounts for just 5 percent of India’s total exports. India’s main exports to China are mineral fuels, organic chemicals, and cotton.

    “We expect some adverse impact on India’s organic chemicals exports to China since the latter accounts for 17 percent of India’s total organic chemical exports. Similarly, India’s cotton exports could be adversely impacted since China accounts for 18 percent of India’s total cotton exports,” ICICI Securities said.

    However, the brokerage expects modest or no impact on other exports by India given China’s small share in them.

    Source from cnbctv18


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