COVID-19 may further dwindle Chinese electronics goods import to India

China's share in the import of electronics and IT hardware goods to India have slid below 40% of the total share for the second consecutive fiscal despite clocking over 55% between 2015-16 and 2017-18 and the Covid-19 outbreak in the neighbouring country could further dwindle due to disruption in the supply chain.

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These concerns have been shared by Ministry of Electronics and Information Technology (MEITY) with Parliamentary Standing Committee on Information Technology with the former saying that the impact would depend on the "severity and persistence" of Covid-19 or coronavirus. The panel has suggested that the high dependency on Chinese import in the sector is still too high and the government should look at broad-basing sources.

Financial Year	Total Electronics and IT Hardware imports in India (including components and semi-finished goods) (In Rs crore)	Total Electronics and IT Hardware imports in India from China (including components and semi-finished goods) (In Rs crore)	Total Electronics and IT Hardware imports in India from rest of the world (including components and semi-finished goods) (In Rs crore)	% of Electronics and IT Hardware imports in India from China (including components and semi-finished goods) (In Rs crore)
2015-16	2,68,105	1,48,555	1,19,550	55.4
2016-17	2,87,559	1,65,848	1,21,711	57.67
2017-18	3,40,901	2,06,086	1,34,815	60.45
2018-19	4,01,458	1,59,165	2,42,293	39.64
2019-20 (between Apr-Dec 2019)	3,03,501	1,11,406	1,92,095	37.6
TOTAL	16,01,524	7,91,060	8,10,464	49.39

Reports suggest that the worst in China -- where the epicentre of Covid-19, Wuhan, is located -- is over in terms of the spread of virus even as World Health Organisation (WHO) has declared it a pandemic due to its spread across the globe.

The Parliamentary panel headed by senior Congress MP Shashi Tharoor had asked the Ministry whether the Covid-19 outbreak in China could affect the availability of electronics goods in India and what steps were taken to prevent any possible scarcity of electronics goods in India owing to the manufacturing slowdown in China.

The Ministry told the panel that imports from China are largely in the nature of components that go into the manufacturing of sub-assemblies and final products. "Due to recent outbreak of Covid-19 in China, there will be a likely impact on the supply of such components due to disruption in the supply chain," it said.

It also said industry associations and major manufacturing companies that sufficient inventory is available for the "next few weeks". Steps are also being taken to explore sources of import of such components from other countries.

According to official statistics, Chinese electronics goods imports accounted for Rs 1.48 lakh crore out or 55.40% of Rs 2.68 lakh crore in 2015-16 while it was Rs 1.65 lakh crore (57.67% of Rs 2.87 lakh crore) in 2016-17 and further rose to Rs 2.06 lakh crore (60.45% of Rs 3.40 lakh crore) in 2017-18.

2018-19 fiscal saw a reverse in trend even as the total import of electronics goods and IT hardware goods rose to 4.01 lakh crore. China's share dipped to 39.64% or Rs 1,59 lakh crore of the total imports. In the current fiscal too till December 2019, the Chinese imports of electronics goods stood at 37.6% or Rs 1.11 lakh crore out of 3.03 lakh crore.

In its report tabled in Parliament, the committee acknowledged that the electronics good imports as a percentage of total electronic goods demand in India is showing a downward trend but said,"at current levels also, there is too much dependency" on China. "Too much dependency on a single country for sourcing electronic goods is a cause of concern," it said.

The panel also wanted the government to promote indigenous production at the same time to "reduce dependency on a single market/geographical region so that any sudden/abrupt/unforeseen event such as Covid-19 outbreak in China do not cause any large-scale shortage inventory in the Indian market".

Asking the Ministry to analyse short to medium term and long-term impact of Covid-19 outbreak in China on electronic hardware sector in India, it said steps should be taken to broad base the sources of electronic hardware imports. The Ministry has informed the panel that industry bodies have been asked to organise buyer-seller meets to explore avenues to broad base sources.