The global coronavirus pandemic has had a major impact on India’s export industry, with many of the nation’s exporters struggling to fill the void left by Chinese suppliers.
In this article, we will explore the effects of the pandemic on India’s export industry, and how Indian exporters can overcome the challenges they face. We will also look at the potential opportunities arising from the current situation and how Insular India’s exporters can best prepare to take advantage of them.
Insular India’s exporters will struggle to fill Chinese shoes
India’s economy is heavily dependent on its exports. According to the World Bank, exports comprise over 14% of the country’s GDP. India has seen a steady export growth over the past few years, reaching $314 billion in 2018-19. The largest export destination for Indian goods is the United States, accounting for 17.2% of total exports. In addition, India sells to other major trading partners such as China and Dubai. Its primary imports are from China, accounting for 24% of total imports.
The recent coronavirus (COVID-19) outbreak has caused a serious disruption in India’s export market as trade with major export partners like the United States, China and other countries have come to an abrupt halt due to travel bans and restrictions on trade and movement between countries. As a result, the availability of Indian products abroad has dwindled significantly. Moreover, Insular India’s exporters will struggle to fill Chinese shoes in many markets as they are not able to compete with larger players like China in terms of quality, quantity and price at this time owing to constraints on production capacity due to external factors such as limited physical availability of resources and labour shortages.
This article seeks to discuss how India’s exporters are navigating this challenging environment caused by COVID-19 pandemic – specifically looking at how their strategies have changed; how they are dealing with increased competition; how they are managing labour shortages; customer experience shifts; technological innovation towards post-pandemic economic recovery shortly etc.,
Impact of coronavirus on India’s export industry
The coronavirus outbreak has had significant implications for India’s export industry. With manufacturing activities across the globe reaching a standstill and demand for goods evaporating, many exporters faced the problem of filling their orders.
Adding to this, India’s interdependence with China has made it difficult for its exporters to replace their Chinese suppliers. China is one of India’s largest trading partners and accounts for more than 18% of exports in 2019. As a result, Indian exporters have seen prices soar as supplies are scarce and competition for commodity markets increases due to reduced shipments from China.
In addition, supply chain disruptions have left Indian exporters unable to secure raw material imports from China and have put them in an even more precarious position when competing with Chinese suppliers. To make matters worse, anti-China sentiment has led some buyers to choose alternative countries for their purchases, further reducing supplies needed by Indian exporters and cutting into their profits even more.
As global demand continues to dwindle because of the virus, India’s insular economy will struggle to fill Chinese shoes in global export markets as its demands slow. As a result, exporters are now forced to take drastic measures such as diversifying product portfolios, exploring new international markets and adopting automation tools to stay afloat during this challenging period.
Impact on Trade Relations
The coronavirus outbreak has had a cascading impact on global trade and India’s export industry has been particularly affected, as China is its biggest partner-country in exports. As Chinese companies have shut down, Indian exporters are now struggling to fill the void and are looking for alternative trading partners.
This article will cover the implications of the coronavirus pandemic on trade relations between India and China.
Decline in trade relations with China
As the impacts of the coronavirus crisis continue to challenge economies worldwide, the established trade relationship between India and China is in precarious territory. As the world’s two largest economies grapple with the fallout of Covid-19, repercussions around this vital connection have been felt particularly keenly by India’s exporters.
India has long had an interdependent dynamism with her neighbour in customs and supply chains; however recent events suggest this reliance is being tested severely by events in 2020. Pre-Covid, Chinese trade interests accounted for 16% of India’s exports; but come April 2020, imports from China dipped significantly with a 37% decrease year-on-year. In April alone, exports from India to China declined by 30% compared to 2019 figures – a sign that major changes may have been set into motion during the meteoric rise of Covid-19.
It appears that insular India’s exporters will struggle to fill Chinese shoes as global supply chains from China unravel beyond repair. This brings complexities like counterbalancing trade on good terms and fulfilling demands without relying too heavily on imports – something which requires diversification strategies and increased fiscal autonomy for Indian export companies. Furthermore, increasing economic pressure means countries worldwide are already mounting tariffs against their respective rivals – raising prices where purchasers can least afford them and catching Indian industry further in limbo when attempting to renegotiate new terms with their trading partners.
In summary, while its yet unclear what kind of alterations Covid-19 will bring upon existing trading patterns globally – Indian exporters must be willing to be proactive if they weather any changes or price discrepancies over coming months efficiently enough not to be completely outpriced against their emerging Asian competitors.
Expansion of trade relations with other countries
The effect of the coronavirus on India’s export industry, especially in light of the increasingly insular stance adopted by the nation’s government, is likely to be severe. Moreover, due to a lack of diversification in the export market and a reliance on the Chinese market, India’s exporters will struggle to fill the gap left by China in a timely and cost-effective way.
India faced difficulties with its major trading partners before the pandemic began. Still, it is now dealt an even bigger blow as demand for Indian exports has declined significantly due to lockdown measures worldwide. This has hampered Indian businesses’ access to vital markets and has had repercussions for industries heavily dependent on exports such as textiles, pharmaceuticals and IT services. In addition, with disruption in global supply chains due to border closures and travel restrictions, trade restrictions imposed on Chinese manufacturers have increased prices for imports from India thus making it difficult for local companies to remain competitive.
With these constraints placed upon businesses operating in India and access limited to international markets, local exporters must look for alternate buyers outside of China that offer competitive pricing and favorable terms. Therefore, expanding trade relations with nations such as Europe, South Korea or Japan is becoming an important priority for Indian businesses seeking stable international connections. Such relationships require significant investment to build trust but can bring rewards if done successfully over time.
Expanding trade relations with other countries will help insulate India’s economy from impacts caused by external shocks like that seen due to COVID-19 while helping domestic businesses survive this challenging time and be better prepared long-term when encountering similar situations again future years.
Impact on Exports
The coronavirus pandemic has caused a drastic drop in export industries worldwide, including India. With the sudden disappearance of China from the international market, insular India’s exporters will struggle to fill the void.
This article will examine the impacts of the coronavirus pandemic on India’s export industry and the potential to bounce back from this difficult situation.
Decline in exports to China
The coronavirus (COVID-19) pandemic in China has greatly affected India’s exports. Chinese demand for Indian goods stood a standstill when the Chinese government imposed strict lockdown measures, and export shipments to China dropped significantly. This has ripple effect on exporters of Indian goods as they are struggling to fill the gap left by Chinese buyers.
To quantify this drastic reduction in Indian exports, overall merchandise exports to China declined by nearly 50% in February 2020 compared with January, i.e., down from USD 1.92 billion to USD 960 million. Sectors such as petroleum products and chemicals have seen the greatest impact – with exports declining substantially due to reduced demand in China; apparel exports have also suffered greatly as sales shifted away from malls and into online channels, where Chinese manufacturers tend to have better presence than most Indian firms.
India must find new export markets for its goods since many countries remain highly dependent on imports from China and other countries also facing disruption due to the virus outbreak. For this purpose, India must look beyond traditional trading partners and focus on newer markets where there is still significant potential for growth given India’s competitive advantage in terms of cost, quality and scale of manufacturing capabilities coupled with accelerated digital adoption across industries.
Increase in exports to other countries
The coronavirus outbreak has upended global economic activity, leading to a sharp increase in foreign demand for Indian products and services. Indian companies are now looking beyond their traditional customers in China to explore opportunities in other countries. This shift has been especially beneficial for the export sector with India’s Merchandise Trade Deficit (MTD) narrowing from $14.84 billion in February 2020 to $10.39 billion in March 2020 as exports bounced back from a three-month decline.
Furthermore, a decline in China’s exports and increased demand globally for Indian products have opened up new avenues for Indian exporters. Sectors such as cotton yarn, leather, agro-processing and dairy products have seen higher exports due to an increase in interest from foreign buyers exacerbated by the decline of Chinese exports. Moreover, sectors such as pharmaceuticals and electronics have seen a boost with exports increasing year on year and month on month due to rising demand driven by panic buying abroad due to the pandemic.
In addition, the depreciating value of the rupee has presented exporters with advantageous pricing opportunities amongst their foreign competitors albeit offset slightly by rising transport costs caused by changes in trade flows across mixed taxes further complimenting the cost advantage of competitively priced merchandise created by the weakening domestic currency regime faced amidst restricted movement of goods and people during lockdowns precipitated by COVID-19 related containment efforts world over.
Impact on Employment
The COVID-19 pandemic has had a devastating effect on India’s export industry. With the disruption of supply chains and the lockdown imposed in India, exports have been a massive decline. This decline in exports has had a wide-ranging impact on the number of jobs in the industry, with many workers being laid off.
Let’s take a closer look at how the coronavirus has affected the employment situation in India’s export industry.
Increase in unemployment due to decline in exports
The pandemic has caused a drastic decrease in exports from India. China, a major trading partner of India, is facing serious economic slowdown due to the virus outbreak. This has had a profound impact on Indian exporters as they cannot fill the Chinese shoes due to lack of orders and lackey of backward integration available for some industries like textiles.
The sudden drop in exports has caused severe unemployment issues in certain regions of India where labor-intensive industries, such as construction and manufacturing, rely heavily on foreign orders. This has been further aggravated by the unpredictable nature of how long conditions can normalize and resumption of trade activities. As a result, an estimated 2 million jobs were lost within these industries as orders from abroad started drying out or getting cancelled altogether.
Simultaneously, there has been an increase in labor demand in certain sectors such as healthcare, delivery services and technology which have formed survival strategies centering largely around eCommerce platforms; this trend is however limited while most businesses are still dependent on markets outside India’s borders. The situation remains dire until such markets re-emerge and increase their imports, thus allowing more opportunities for Indian producers to come forward.
Increase in demand for skilled labor
The impact of Covid-19 on India’s exporters that rely on the Chinese market is an important issue for policy makers to consider. Insular India’s exporters have a competitive disadvantage due to the pandemic, as global demand has shifted from Chinese suppliers to companies in other countries. This change in supply chains presents an opportunity for India, but also exposes Indian exporters to increased risk unless proper measures are taken.
One way for India to take advantage of this new situation is by exploiting its existing human resources and low labor costs as sources of comparative advantage. By investing in developing the skillset of its current workers and augmenting local labor forces with high-skilled migrants, India can replicate Chinese productivity levels while maintaining a cost effective structure. This will enable the country’s businesses to keep up with the demands of overseas buyers.
Such an agenda requires government-driven investments in education and training programs to increase local labor productivity, combined with targeted immigration policies facilitating skilled labor mobility within the domestic labor force. With such adjustments, India can benefit from China’s losses by taking over some of their traditional market share.
Impact on Economy
The spread of coronavirus has had a major effect on India’s export industry. India’s exports to China, its largest import partner, have steadily declined in the past months with the disruption of the global trading system. This has severely affected India’s economy, as exporters are finding it difficult to fill China’s shoes in the global market.
In this article, we’ll discuss how the coronavirus has impacted India’s export industry and how this might affect the economy in the coming months.
Decline in GDP growth
The Indian economy was already facing difficulties before the coronavirus crisis worsened. Insular India’s exporters will struggle to fill Chinese shoes, as it has limited access to global production and distribution networks. The government has announced a series of measures to mitigate the damage caused by the pandemic, but the effect on GDP growth for this financial year is uncertain.
Analysts have projected that the full-year real GDP growth rate in 2020–2021 could be anywhere between 0 and 0.9%. The contraction in consumption demand is expected to be a major cause of reduced economic activity, leading to deterioration of balance sheets in both private and public sectors.
Since April 2020, several industries have come under considerable strain as supply disruptions lead to a fall in manufacturing activity due primarily to suspensions in domestic production and contractions in exports. A combination of reduced foreign investments, weak domestic sentiments, job losses across many companies due to the lockdown are likely reasons for the dismal performance of sectors such as automobiles, aviation, hospitality and tourism related services that account for a significant portion India’s total exports.
Exporters are likely to face further strains as suppliers cannot deliver bids within set timelines due to disruptions from lockdowns imposed across different countries globally. Moreover, with supply chains spanning different countries exposed at points vulnerable to disruption (a possible second wave), existing concerns about sustainability could be exacerbated near term until normalcy ensues globally which could require exporters to rely heavily on local vendors or imports from other countries for continuity or risk critical delays or breakdowns in their operations – either way getting them wide off their estimates 2019-2020 fiscal year performances establishing new footing post pandemic – critically reducing ability grow revenue due difficulties associated reaching export postures catering customer demands.
Increase in inflation
India has experienced a significant impact from the coronavirus on its export industry. While initial estimates of the loss and potential recovery have been made, it remains unclear how long and to what extent the disruption will continue. Overall, India has experienced an increase in inflation as prices rise, aggravated by shortages of certain imported items. This is due to a decrease in the supply of goods into India during the lockdown and disruptions in global supply chains caused by international trade restrictions. This has resulted in a rise in production costs due to delays or an inability to source locally unavailable products.
Furthermore, there has been a fall in export revenue because of reduced demand for Indian products and declines in demand from major defectors such as China. The ongoing US-China trade war and Chinese industrial downturn have pushed many multinational corporations away from China and towards other Asian countries such as South Korea and Vietnam – countries that have successfully dealt with their COVID-19 pandemics – leading to remarkable boosts for their economies. As this shift continues, insular India’s exporters will struggle to fill Chinese shoes; making them less competitive than before.
To improve India’s economy, experts suggest focusing on digitization and aggressive implementation of preferential trade agreements (PTAs) with regional trading partners like ASEAN countries should act as supporting pillars for Indian exporters struggling with higher input cost. They also advocate making necessary adjustments relating essential imports vis-à-vis export proceeds coming into India such that exporters get more freedom on managing exchange rate risks. At the same time, they commit valuable export orders dependent on market conditions rather than getting hit by foreign exchange fluctuations. In addition, consolidation indicated through sectoral focus & strategic partnerships will also act beneficial for Indian exporters so that technological strength can be pooled together with minimal external outreach costs (while going global).
