“The disruption caused, if prolonged, could have a bearing on India’s imports from the country which is critical for domestic economic activity. Finding substitutes for imports from China in the near term could be a challenge,” noted credit agency CARE Ratings in a recent report. “Further, a slowdown in economic activity in China could impact exports from India.”

There have been three confirmed cases of coronavirus in the country so far, all in the southern state of Kerala. The state government, on Feb. 4, declared the fatal disease as a “state calamity.”

In China, the disease has claimed 563 lives, so far. Due to the panic, on Feb. 3, Chinese stock markets faced their worst sell-off in many years, wiping out nearly half a trillion dollars from the value of the country’s leading firms.

Impact on industries

The hit on the Chinese economy is bound to have a domino effect on a host of sectors in India.

Export opportunity, import crisis

The crisis, though presents an opportunity for Indian exporters.

“With local production being affected (due to the coronavirus outbreak), there could be an increase in China’s imports from other countries which can provide an opportunity for Indian manufacturers,” the CARE report observed. India mainly exports chemicals, petroleum, agriculture, engineering goods, cotton yarn and plastics to China.

However, substituting imports from China can be tricky. India largely sources electronics, engineering goods, and chemicals from China. “Non-availability of such products from China would mean related parties in India will have to scout for alternative markets which can mean higher costs,” the report added.

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