Care Ratings says, “India is likely to expect a 0.5 per cent hit on economic growth this fiscal if the COVID- 19 pandemic lasts longer” If China continues to battle with the coronavirus, Indian garment manufacturers will need to look at other alternatives, including local sourcing, which in turn may increase the cost of finished goods by three per cent to five per cent. Furthermore, finding vendors will take a toll on lead times, quality and cost in such a short time. India exports an average of 25 million kilograms of cotton yarn a month to China. The Tirupur garment sector is heavily dependent on China for the procurement of accessories. China’s complete closure has weakened its supply chain. If accessories come from a trader in India or from an overseas market other than China, the sector that hurt its margins.
Unless the virus persists for longer, the economic effects would be severe, and long-term. There is also fear of a widening of the fiscal deficit. The Banking sector’s NPA rates are expected to grow. It is likely that exports and imports are contracting. Although hospitality, leisure, aviation, auto and car ancillary will be hit hard, the pandemic will profit pharmaceuticals and healthcare.