This article was compiled from India Articles from the latest issue of Business Magazine Today this week .

A simple saying often refines and outlines the subtle changes in the status of power in international competition. In the 19th century, the Austrian politician Clemens von Metternich (Klemens von Metternich) quipped, “Paris sneezes, Europe will catch a cold. ” But in the 20th century, Paris’ status was quietly replaced by the United States, and the change in global trade was behind the transfer of power. To this day, the focus of power has shifted again, and this time, the focus of the world has focused on the East. If you say, “China sneezes, the world will catch a cold.” What about India? How will India’s industries be affected when our northern neighbors are facing small economic troubles due to the invasion of the new crown virus?

Let’s put a few sets of data first: China is India’s second largest trading partner. From April to September 2019, the trade volume between the two countries reached 64.9 billion U.S. dollars. At the same time, a large part of India’s trade deficit also comes from China, accounting for about 32%. In fiscal 2019, India imported $ 4.6 billion worth of auto parts from China, accounting for more than a quarter of India’s parts imports. 65% of the imported drugs in the (National List of Essential Medicines, NLEM) are imported from China. For example, paracetamol, 80% of the raw materials that make up its active ingredients come from China. (The active ingredient of a drug is also called a drug substance, which is the raw material for the manufacture of a drug) .

Based on the above data, many experts said that China’s coronavirus may make the Indian economy that has not yet come out of difficulties worse. Yes Bank, a bank that provides loans to private companies, recently stated:

“Previously, we expected that the manufacturing and service industries would continue to expand, but the overall pace may be slow. At the same time, affected by the rainy season brought by the subtropical monsoon, improved planting conditions, and the tilt of agriculture by trade policies With the increase in the budget quota of agricultural-related institutions, India’s domestic demand will gradually recover in FY2021. In terms of international trade, it is expected that the thawing of China-US trade relations will stimulate exports, and the transmission of monetary policy should also stimulate consumption and investment. Demand. But with the outbreak of new coronaviruses in China at the end of 2019, the above-mentioned positive effects may have to be delayed for some time to emerge. “

This new coronavirus, which can induce a range of respiratory diseases, originated in Wuhan, Hubei Province, China. And it didn’t take long to reach 18 provinces in China. At present, more than 60,000 patients have been infected with the new crown virus nationwide, and more than 1,300 have died due to illness. The new crown virus has now spread to 25 countries, and the accompanying travel restrictions and forced shutdowns of factories have affected the global supply chain. According to D & B ’s (Dun & Bradstreet) , according to data from New Crown Virus, active companies in China The number accounts for more than 90% of the country:

“Globally, one or more tier one suppliers of at least 51,000 companies are in the above-mentioned regions of China. One or more tier two suppliers of at least 5 million companies in the world also In these places. “

The magazine spoke with some companies in India that rely on the Chinese industry chain to try to understand the potential impact of the outbreak on them.

Automotive industry

The automotive industry accounts for 49% of India’s manufacturing GDP. Although India also has its own auto parts companies, it is still inseparable from the support of China’s industrial chain. And the current reality is that the total price of parts imported from ChinaHas been climbing. Taking fiscal year 2019 as an example, the total value of India’s auto parts imports from China has reached US $ 4.6 billion; in the first six months of this fiscal year, China’s imports from China have reached US $ 2 billion.

“In today’s world, no country can produce everything, and the automotive industry is no exception. For example, electronic components are our weak link, and we can’t live without China at the moment. So … yes, the new crown virus does We have a degree of influence. “Guenter Butschek, managing director of Tata Motors (Tata Motors) , bluntly.

“We estimate that employees should be able to return to work next week. This way we can conduct a project check to see how many products have been shipped, how many products have been shipped, and how many products can be shipped … pending After the data is cleared, we can calculate how much the epidemic has affected our production plan. Now what we are most worried about is the problem of product operation, but only after employees resume work and the various mechanisms are activated again, Can really start to solve. “He added.

Jaguar Land Rover under Tata Motors (Jaguar Land Rover ) < / span> has extended downtime at its factories in China and required 3,000 employees to work from home. The joint venture Chery Jaguar Land Rover’s (Chery Jaguar Land Rover) factory is located in Changshu, only 800 kilometers away from the epidemic outbreak center in Wuhan.

Hero MotoCorp , India ’s largest motorcycle maker hero motorcycle company (MG Motor) This company is a subsidiary of China’s largest automaker SAIC Group. They just entered the Indian market last year.The iconic product is the Hector midsize SUV. Last month, they released the ZS EV, a light electric SUV.

“Affected by the inability of many suppliers in Europe and Asia, including China, to supply in a timely manner, we expect that the company’s production line supply chain will be affected.” said Gaurav Gupta, Chief Commercial Officer, MG India, “Today’s inventory The volume has almost reached the bottom, but there are still many backlogs that have not been processed … Now it seems that February sales are definitely lower than expected, but this is only one of the problems. We have too much work to do: We need to appease customers who have already placed an order but cannot get the car. We need to coordinate the operation of various departments … In short, the most important thing now is to do everything possible to minimize the impact of the epidemic.

Gaurav Gupta, Chief Commercial Officer, Tata Motors

The epidemic will even affect the implementation of Indian environmental policies.

The Indian government originally planned to raise the vehicle emission standard from BS-4 to BS-6 in April this year, but due to the sudden new crown virus, the time for policy transition may have to be extended. Ma Hengda Group (Mahindra and Mahindra, M & M for short) said that if the components from China could not arrive in time, then the company is currently the last batch of The BS-4 cannot be put on the market on time. According to the requirements of the New Deal, the government will no longer register new BS-4 vehicles after March 31, and new vehicles on the road must meet the BS-6 emission standards. Therefore, if the last batch of BS-4 vehicles are stuck on the production line, the owners who have previously ordered this model will not be able to register their cars even if they receive the cars later. Because of this, many car companies, including Ma Hengda, are facing tremendous pressure from downstream dealers.

“Originally, if there was no new crown virus, I would n’t seeTo any risk factors that can hinder the transition of the policy, “said Pawan Goenka, general manager of Ma Hengda, with a bit of helplessness.” I now hope that the next week (no, the next ten days will work). In that case, everything is too late. If it is not possible to start construction after ten days, then 3000 ~ 3500 BS-IV vehicles stuck in the factory will be troublesome. Although we already have other parts here, but the parts over China are not available, we can only rush. “


Pharmacy

India pharmaceutical companies rely heavily on China in purchasing pharmaceutical ingredients or APIs, especially penicillin G, tetracycline, and vitamins such as vitamins C and D. The above-mentioned medicines require fermentation process in the manufacturing process, and in this regard, China’s technological level is in the leading position in the industry.

The dependence of Indian pharmaceutical companies on China is also reflected in other aspects. For example, officials of the Indian Drug Promotion Council have stated that in the Indian National Key Drug List, ) , 65% of the imported drugs are imported from China. Outside the NLEM list, China’s imports account for a larger proportion, as high as 90%.

According to Krishna Prasad Chigurupati, chairman and general manager of Indian pharmaceutical company Granules India, 80% of the raw materials for the manufacture of acetaminophen active ingredients come from China; nearly 90% of the raw materials for first-line anti-diabetic metformin raw materials also come from China.

In terms of amount, according to the data provided by the Indian Council for the Promotion of Drugs, the total value of raw materials imported by India from China is $ 2.5 to $ 3 billion, which is about Rs. 170 crore. Now with the spread of the new crown virus, the price of APIs is also rising, for example, the price of acetaminophen has increased by 30% to 35%. However, Chigurupati believes that prices will fall sooner or later, “after all, the main source of supply is not Wuhan.”

The Indian government has contacted most Indian Pharmaceutical Associations and related companies to obtain specific data on stocks and shortages of medicines. It is reported that many companies have stated that they can persist for 5 to 6 weeks.

This raw material shortage has also alerted the Indian pharmaceutical industry, and they urged the government to take proactive actions at the policy level to promote India’s pharmaceutical industry.