2. On 28th February 2020, the BSE Sensex closed on 38,297. India had not
recorded any coronavirus cases in February and life in the country was
going on as usual. Exactly a month later, India is under a complete lock-
down, the number of coronavirus cases has crossed the 1,000 mark
and the BSE Sensex has lost approximately 10,000 points. While a slew
of financial relief & support measures have been announced by the
Govt. of India and RBI, the sentiments largely remain weak. While most
people know that the current lockdown is temporary, they aren’t sure
of how the coronavirus story would impact the Indian economy in
2020.
3. In 2019, China exports to the world stood at $2.4 trillion, while India’s
exports stood at $330 billion i.e. just 13% of China’s exports. For
decades China has been the manufacturing capital of the world. Right
from electrical parts, electronics, pharmaceutical APIs, textiles,
chemicals – even the other top exporting countries like the United
States, Germany, South Korea, France, and UK are dependent on China
for cheap imports. Because of low costs, China’s products have always
been preferred over imports from other countries. But the coronavirus
story has exposed a chink in the armour.
4. In the past 2 years, due to factors such as trade-war with the US and
the environmental crackdown in China, many countries had started
exploring alternatives to China, but didn’t have any compelling reason
to reduce their over-dependence on China. But the coronavirus story
has made this risk of ‘over-dependence’ on China a matter of grave
concern to the whole world. This means that once the world
overcomes this crisis, there will be rewriting of this equation. To ensure
they never face a crisis like this, companies across the world will seek
to mitigate this geographical risk of over-dependence on China. And
India is one of the countries that could gain from this.
5. India also has an active manufacturing ecosystem. Indian
manufacturers in areas such as auto ancillaries, chemicals, textiles and
pharma could largely benefit in this post coronavirus scenario.
Remember, India’s exports to the world stood at just 13% of China.
Even if 10% of China’s exports value comes to India, the Indian
manufacturing could see an exponential growth chart.
Now is the time to find fundamentally strong manufacturing companies
that could potentially benefit from the coronavirus story.
