Virus fallout: India braces for massive supply chain disruptions

India’s leaders are sounding the alarm over disruptions in trade and manufacturing because of the coronavirus.

To compensate for the factory closures in China, the New Delhi-based Deki Electronics is leaning more heavily on South Korean suppliers [Ruhani Kaur/Bloomberg]
To compensate for the factory closures in China, the New Delhi-based Deki Electronics is leaning more heavily on South Korean suppliers [Ruhani Kaur/Bloomberg]

Indian business leaders are calling for cuts in import duties on antibiotic drugs, mobile phone parts and other items to help cope with supply disruptions fuelled by the coronavirus outbreak in China.

The outbreak of the virus in China has hit India’s manufacturing and exports sectors. Hit particularly hard are medicines, electronics, textiles and chemicals. China is India’s biggest source of intermediate goods, a sector worth $30bn a year, the Confederation of Indian Industries informed Reuters news agency.

Indian finance minister Nirmala Sitharaman said the government would announce measures in the coming days after discussing them with other ministries and the prime minister’s office. She did not elaborate on the measures.

Sitharaman met more than 200 business leaders to assess the impact of the coronavirus and discuss plans to contain the damage.

The outbreak, which has now killed more than 1,868 people in China with 72,436 infections, has disrupted supplies of raw material to other countries.

India sources about up to 70 percent of active pharmaceutical ingredients and close to 90 percent of certain mobile phone parts from China, according to a presentation by another industry chamber, which represents more than 250,000 companies but did not wish to be identified.

Ratings agency Moody’s said on Tuesday that the coronavirus outbreak added to pressures on growth in Asia. The impact is felt primarily through trade and tourism, and for some sectors through supply-chain disruptions.

Moody’s cut its economic growth forecast for India for 2020 to 5.4 percent from an earlier estimate of 6.6 percent, and cut the forecast for 2021 to 5.8 percent from 6.7 percent, saying the revisions were also affected by weakening domestic demand.

Daara Patel, secretary general of the Indian Drug Manufacturers Association, which represents more than 900 drug producers, said the industry was facing rising prices of raw material and supply shortages.

“The prices of some antibiotics, vitamins and other medicines have gone up by 15 to 50 percent following fear of disruption in supply of ingredients,” he said.

The pharmaceuticals industry is concerned that stocks of active ingredients for drugs such as paracetamol and ibuprofen could last for 15 days and two to three months for other drugs, the presentation by the unnamed industry chamber also showed.

Source : Reuters

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