Only consumer goods may see green shoots amid coronavirus pandemic

The Covid-19 impact on various sectors of the Indian economy would depend on the longevity of the outbreak and the lockdown. Except for essentials in the consumer goods, most sectors would be impacted

Aviation: The ensuing cash flow disruption could possibly lead to breach of debt covenants if the outbreak escalates and results in a prolonged near-zero revenue situation

Shipping: Container terminals at the major ports in India have already reported a few blank sailings or cancellation of port calls. This could intensify in the coming weeks depending upon the level of outbreak in India’s major trading partner countries

Tourism: The travel bans in place translate to a foregone revenue of around US$ 5 bn for the industry from foreign tourists alone. The magnitude of the impact would be much larger when foregone revenue from domestic tourists is also accounted for

Retail: While textile, footwear, fashion accessories, furniture, and other household appliances will have revenue losses, food and other FMCG essential services segments will likely face a surge in sales driven by panic buying and hoarding

Livestock: Given that the average farm size in India is 8,000 birds with a 40-day production cycle, a typical poultry farmer would lose around Rs 10 lakh. Losses of this magnitude with no signs of price recovery are expected to drive many players out of business

MSMEs: Only 53% of large companies in India pay their suppliers on time. Slowdown may force large firms to scale down production. The ensuing cash flow disruptions will lead to delayed payments to MSMEs, triggering credit defaults and permanent business closures of highly leveraged MSMEs, and rendering many people jobless

Gems & jewellery: With the growing number of Covid-19 cases, revival of the sector does not appear imminent. Given that the gems & jewellery contribute to 12% of India’s merchandise exports, the impact of the slowdown in global demand is expected to pull down India’s overall exports very steeply

Electronic goods: High level of dependency on imports makes the sector highly vulnerable to foreign exchange risk coupled with fear of supply constraint. Of the total demand for electronics in India, about 50-60% of the products and 70-80% of the components are imported

Automotive: Normally, auto companies maintain a one-month or two-month inventory, however if the supply chain remains disrupted for next two months, the Indian auto industry may face significant revenue loss

Drugs & pharma: The impact of COVID-19 outbreak on the drugs and pharmaceuticals sector is expected to be moderate. The sector contributes to 1.2% of India’s gross value added and 7% of manufacturing value added

Textiles: The Covid impact on the textile sector is expected to be moderate in the coming weeks. However, if the outbreak remains prolonged then the impact is expected to be high