The world keeps on pursuing its fight against COVID-19. As countries clear down their lanes with different types of limitations and lockdowns, the slowdown in the growth of the worldwide economy feels more articulated than any other time in recent memory. This epic strain – named SARS-CoV2 – that started from Wuhan, took the world by a tempest. For India, despite a slower curve of infection, the effect has been merciless from various perspectives. The nationwide lockdown has been assessed to cost around USD 4.5 billion every day. Most of the organizations of the nation are facing the negative impact of the pandemic, and the supply chains have succumbed to it.
Trajectory of Silver Lining
There appears to be a silver lining in obscurity mists. Throughout these times of crisis, few variables might turn out as ideal for India to turn up as a significant trade and commerce player in the world. The possibility of India emerging as a trade hub opens up various opportunities for the existing as well as new businesses in India. The opportunities can be looked upon as follows:
Outsourcing hub: The implications of the global economic slowdown might be that the first world economies such as the US might be looking out for low-cost outsourcing solutions. This might open up opportunities in various fields like IT, Finance, or non-core items. If India can rise to the challenge and grab the chance it may help boost various sectors and generate
A shift of manufacturing units: Many of the foreign manufactures find India a good alternative to china. As the companies are thinking of either shifting or splitting their manufacturing facilities to other nations than China. According to some reports around 300 companies are already in talks with the Indian government for production in various sectors like textile, pharmaceuticals, and electronics. If India can capitalize on this, Then, in turn, this would lead to the development of infrastructure of manufacturing facilities around India and also boost employment.
Being autonomous: For quite a while many of the Indian industries have been overly dependent on foreign nations for the supply of raw material or finished goods. The disruption of supply chains caused by the pandemic has got organizations thinking about the possibilities of localization of the supply chain. Many of the organizations are thinking about backward and forward integrations of their supply chains. This also presents opportunities for new businesses to set up their facilities to substitute the raw materials and finished goods which were until now imported from foreign countries.
Source of supply: The situation of the Covid-19 crisis has shown the mirror to various countries and now they have started to realize that all this time they have been too dependent on just one nation for the supply. This realization of the truth has made countries and organizations to look for alternatives which can be beneficial for India to enter multiple trade channels as a supplier of raw materials and good. This possible increase in demand for the supply of raw material and manufactured goods from the Indian market might again present new opportunities and a boost to the organizations as well as the manufacturing sector generating revenue and employment. The table below shows the export and import figures of the worlds top three nation in terms of trade:
While on the contrary the India’s share in global trade (merchandise and services) was 2.1% (481.74 USD billion out of total 23,044 USD billion) for exports and 2.6% (600.62 USD billion out of total 23,112 USD billion) for imports. This data shows that how far behind we are from the leaders of trade and the size of the opportunity which is present in front of us. The situation of COVID-19 is going to affect the %of global exports of China significantly which right now stands strong at 13.45% of the global export volume. If India is able to increase its share by merely 1% that too will give a huge boost to the economy and the sectors and would lead to generation of revenues and job creation in the nation.
The past data shows us that by a boost of exports between 1999-2011 a total of 8,00,000 jobs were created in the formal and informal sector, while around 2.62 crore new jobs were created in rural and urban areas between 2011-12 and 2017-18 among regular wage and salaried employees. For these possibilities to come true Indian government and different sectors will have to work under harmony and overcome all the obstacles which are in the way. This could lead to another golden era for the nation of India in terms of employment and revenue generation.
Future anyway is hard to foresee, however envisioning where a solitary seed can be planted to bear a massive bearing tree is a thing that we have to do.
Shubham Mahla is a BTech graduate from Vellore Institue of Technology(Vellore) and is currently pursuing his MBA in Finance from Institute of Management, Nirma University. His keen inclination towards Finance and passion for learning has persuaded him to explore the field with excellent work in research and application tools. As an intern at Jagdish Hirani & Associates his contribution in this article has helped him in holistic developments with deep insights.
Parth Hirani is a leading strategic advisory practice at J.Hirani & has helped various organizations align strategies across continents. A social & collaborative sapien by nature. He enjoys being a full time “dreamer” & loves challenging “possibilities”.
Success mantra- “We believe it’s possible; while maintaining flexibility on “How” we are “Rigid” on our “Goals”
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