Indian economy after COVID-19: a positive outlook
“In the middle of difficulty lies opportunity” -- Albert Einstein
The world continues to wage its war against COVID-19. As nations sweep down their streets with various forms of restrictions and lockdowns, the stall on the growth of global economy feels more pronounced than ever. This novel strain – dubbed SARS-CoV2 – that originated from Wuhan, took the world by a storm. With global spread reaching staggering numbers, losses - both to human lives and economy - are irrecoverable.
For India, despite a slower curve of infection, the impact has been ruthless in many ways. The initial 21-day lockdown period had been estimated to cost nearly $4.5 billion every single day. Despite about half of the nation’s businesses being adversely affected, and supply chains having fallen victim to the pandemic, there does appear a silver lining in the dark clouds.
A trajectory of silver lining
India has so far managed to keep a relatively flatter infection curve in its battle against the pandemic. When compared to other countries, it does appear to have a better chance of pulling off with lesser collateral damage, at least for the time being.
However, several factors are already playing in, or might play out, during the course of these events, and these might prove to be favourable for India to become a major trade and commerce player in the world.
An outsourcing hub
The global economic slowdown will mean that first world economies – such as the US – will be looking out for low-cost outsourcing solutions. Whether it is IT, finance or non-core items, India can rise up to the challenge.
Globally, buyers have already shifted to India to source ceramics, home, fashion, and lifestyle goods.
The drive to look for alternatives can be beneficial for India to enter multiple trade channels as a supplier of raw materials and manufactured goods.
A shift in manufacturing
Around a thousand foreign manufacturers want to relocate their production to India, a country they see as an alternative to China. Reportedly, at least 300 are already talking with the Indian government for production in a wide range of sectors, including electronics, medicine, and textiles. Impact? Infrastructural development around manufacturing facilities and a boost to employment.
Supporting the cause
This year, the government has proposals to hike import duties on more than 300 products, such as an increase of 30 percent in furniture import from the current 25 percent price. This can provide an opportunity for local production to break out within the market, especially OMEs, SMEs, and even the ever-so-varied handicrafts of India.
Of dependencies and actions
Much of the world has had China as its resource, assembly and manufacturing hub, especially in the case of electronics and mobile accessories. However, given the source of pandemic and actions taken over it, the world is paying a heavy price.
There is no easy way to put it: the pandemic has instilled a shift in consumer psychology, and the outcome will be an altered behaviour towards the market, especially China and its products. However, before India leaps to fill this global void, it needs to cut the shackles of its dependencies.
India has had an over-reliance on Active Pharmaceutical Ingredients (APIs) supplied from China. The shutdown of supply chains, however, has called for a need to shift the market or become independent. Thankfully, the government has planned to boost local production of these APIs and emerge as a global alternate supplier.
For a long time, China has been in the top of India’s imports list for a variety of items. It is no denying that, given the pandemic, the supply has been hit hard. But the Indian government is already exploring alternative countries for over 1,000 items to replace China as their supplier.
Undoubtedly, there are many hitches to overcome, some which will require other countries to lift themselves up from the pandemic before entering trade negotiations.
Future, however is difficult to predict, but anticipating where a single seed can be planted to bear a massive fruit-bearing tree is what we need to do. The COVID-19 pandemic will, undoubtedly, continue to keep us all on our toes until a vaccine comes out. But hope is what we have, so it is what we shall use.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)