Asia virus infects businesses now as travel curbs bite
THE DISRUPTION COULD CREATE A SHORTAGE OF GOODS AND DRIVE UP PRICES, IF THE CRISIS PROLONGS
NEW DELHI: Indian companies are bracing for production shortages, disruption in shipments and scarcity of critical bulk drugs and lifesaving antibiotics amid a travel clampdown in China, which is struggling to contain the outbreak of the deadly coronavirus.
Countries across the globe, including India, have warned citizens about travelling to China, where the coronavirus has left 132 dead and infected more than 5,000 people. Despite measures to limit its spread, the virus has now infected people in 20 countries.
The ripple effect of the travel restrictions could soon hit India, which imports more than $70.3 billion worth of goods from China and exports products amounting to $17 billion. Traders told Mint that the disruption could create a shortage of goods and drive up prices, if the crisis prolongs.
Indian businessmen, who routinely travel to Chinese cities to shop and place import orders for consumer goods, say they are postponing their travels scheduled for the next two months.
The disease outbreak has resulted in global brands including Swatch and Apple shutting stores. On Wednesday, Toyota Motor Corp. halted operations in China until February 9, joining a growing list of global companies that have cut back on business activities in the country.
New Delhi-based distributor Smit Bangar, who has been importing footwear, apparel and mobile phone accessories from China for over two decades, said he has cancelled an upcoming trip in March. Bangar visits China every two months to buy goods. “The current situation resembles the 2002-03 outbreak of the SARS virus that killed an estimated 800 people globally,” he said. “Business took at least eight months to recover then,” said Bangar who runs Skymax International.
Therefore, supply of goods such as apparel may not be felt immediately, particularly as businesses usually stock up and place orders in advance. But if the virus spreads and people stop travelling to China, then there would be an impact, said Rahul Mehta, president of the Clothing Manufacturers Association of India.
A Delhi-based trader of kitchen goods, who imports from China, said his stocks will run out in about a month as he has postponed a trip. Indian drug makers said they are bracing for a possible disruption in the supply of raw materials, majority of which is imported from China.
“We buy antibiotics and vitamins in a big way from them (Chinese manufacturers). As of now, there is no problem but we will have to wait and watch for another 8-10 days more to see if the coronavirus outbreak continues,” said Daara B Patel, secretary general of the Indian Drug Manufacturers’ Association.
Another industry official said the brunt of the impact is being felt by pharma traders, who don’t maintain large stocks. In 2018-19, Indian companies imported bulk drugs and intermediates worth $2.4 billion from China, which was about 68% of the total imports of the raw material.