New Delhi: Finance minister Nirmala Sitharaman held wide-ranging talks with government secretaries and senior executives of various companies on Tuesday to assess the impact of the coronavirus epidemic on Indian businesses, even as US tech giant Apple said it won’t meet its revenue target for this quarter due to the impact of the disease.
Sitharaman said she will chair a meeting of secretaries on Wednesday afternoon to chart a course of action, which will be finalized after consulting the Prime Minister’s Office. Apple and its manufacturers have had to shutter their businesses in China for weeks as demand has plunged following the outbreak of the coronavirus.
Apple is not the only one. Businesses worldwide are feeling the heat not only because of lower demand in the world’s second-largest economy, but also because Chinese factories, key global suppliers of products, have either shut down or are operating at a fraction of their capacities.
“The manufacturing sector, which depends on raw materials from China, is worried that while some of them are receiving the stocks but because necessary paperwork is not coming from China, their stocks are being held at Indian ports," Sitharaman said. “Their request was can the customs (department) take a self-declaration from them and release the stocks. Others also raised the issue of looking at other sources for raw materials."
The finance minister said none of the executives raised concerns about price rise or an immediate shortage of raw materials during the meeting.
“Shipping lines are still arriving and raw materials will be coming (from China) for the next week or so. So, it’s more a question of remaining prepared for any developing situation in the next few weeks," Sitharaman said.
Representatives of micro, small and medium enterprises pointed out that payment receipts are taking time because of staggered supply of raw materials and requested banks to be flexible about guarantees.
“It might be that in the next few months after the virus effect diminishes, there could be a rush of all the materials coming to our ports, which have been delayed in the last few months and therefore industry also wanted us to be alert to the fact that if today it is getting staggered, sooner there will be a time when all of it will come almost at the same time. Our ports should be in a position to handle that congestion," Sitharaman said.
Industry executives said the novel coronavirus outbreak is threatening to bring manufacturing in India to a standstill in segments such as electronics, which are dependent on China for parts supplies.
A report by the Confederation of Indian Industry (CII) said 45% of total electronics imports in India come from China. “One-third of the machinery and almost two-fifths of organic chemicals that India purchases from the world comes from China," the report said.
It added that China’s share in imports is more than 25% for automotive parts and fertilizers, while 60-70% of pharmaceuticals in India are also sourced from China, according to the report.
India imports goods worth more than $1 billion from China in pharma, fertilizers, medical devices, inorganic chemicals and textiles sectors. “The pharma sector is particularly vulnerable as it is a matter of health of Indian citizens, and also has an unduly high dependency on China," CII noted.
Industries such as tourism, aviation, textiles and solar power are expected to face the impact of the coronavirus at various degrees, which is likely to be visible from March onwards.
“Air shipment imports from China have been halted and all sea vessels that have already moved out of China are being sent earlier to destinations and the ones pending are halted at ports," a person familiar with the matter from Tata Projects said on condition of anonymity.
CII also noted that some cities in China have shut toll gates and loading or unloading at Chinese ports has also been suspended. Vessels to China are being re-routed while those from importing countries are “not plying on the China-India route due to lack of full load of the containers".