The impact of the coronavirus on the world’s economy is huge. All the businesses, economists, bankers have been saying the same thing. But this could be a positive for us. This could boost manufacturing in the country. Here is how.
With the spread of the virus, there has been lockdown throughout the world. Almost all nations have enforced their public to stay home and be safe. The virus origin point China has stopped all of its exports. It is one of the largest exporters of steel, chemicals, toys, mobiles, rare earth materials, electronics, garments, bulk drugs, etc. This lockdown has resulted in shutting down the manufacturing units along with transportation and shipping. Most of the countries have already realized the effects of depending on other countries.
This supply disruption caused by the COVID-19 is similar to the one which happened in 1970 due to the oil, where prices have been increased substantially. This also caused the economy to slow down in 1970. But the situation now might be slightly different. The disruption which is currently present due to COVID has reduced the demand for crude oil and other primary commodities. Hence there is no surge in the prices of crude oil. Even if the prices of the primary commodities are under control, there could be a huge increase in the prices of manufacturing goods like mobiles, medicines, pharma goods, etc.
India has been dependent on China for some of the mentioned things, but its dependency on pharmaceutical manufacturing will be a big vulnerability. A bulk of APIs (active pharmaceutical ingredients) will come from China and it may take some years for India to rely on its own in production of these APIs
India can take the chance of this situation and manufacture some of the products which are of high demand from the rest of the world. But India’s land and labor costs, taxation policies will be crucial in achieving this. The US-China trade war after the COVID outbreak is an example for each country to not trust a single country for all of its requirements.
If India is going to take a chance here and set up manufacturing in the country, then the job opportunities will be high and inclined towards the non-farm sector. In the initial stages, this could be a problem due to the less number of wages and more number of labor ration, but eventually, with the time, this will not be a problem as the manufacturing increases with time.