Coronavirus outbreak in China an opportunity for Indian exporters

In course of the outbreak, several manufacturers have been holding back on their orders of raw materials from China

2 min read Last Updated : Feb 13 2020 | 1:09 AM IST

While there are concerns of a slump in the supply of raw materials and goods from China owing to the coronavirus outbreak there, the situation, in fact, presents an opportunity for India to boost its exports and emerge as a hub for assembling, chief economic advisor to the Centre, Krishnamurthy V Subramanian said.

On the sidelines of an event organised by Indian Institute of Management-Calcutta, Subramanian said, “ India can follow an export-driven model, especially integrating the assembly in india. In this context it's a good opportunity. Because of the uncertainties being faced by China, it is a good opportunity for india to utilise that.”

He said that during the Severe Acute Respiratory Syndrome (SARS) outbreak in 2002, India wasn’t impacted much. According to Subramanian, China itself imports components from rest of the world, assembles them on its territory, and then exports them.

“If we look at what happened in the mobile manufacturing space in India, we have been following the same pattern. So if you look at in terms of the components in some of these network products, its actually an opportunity for us”, he said.

In the course of the the outbreak, several manufacturers have suspended raw material and finished goods purchases from China.

However, typically, from January, owing to the Lunar New Year holiday period, factories slow down production and Indian as well as global procurers typically pre-book their orders and stock up in anticipation of a supply shortfall. In the course of his lecture at the institute, the economist said that the Essential Commodities Act, 1955 needs to be done away with as it is an “anachronistic piece of legislation”.

According to Subramanian, while giving an example of the recent onion and potatoes prices, the Act has lost its relevance and has failed to keep prices under check in difficult times.