As China is battling the new variant of Omicron, companies across the world are concerned about its ripple effect on the global economy. Indian firms, be it electronics, attire producers, or gold and diamond exporters, all are worried about another bout of supply chain disruptions. They all depend upon China for supplies. For instance, attire producers rely on China for uncooked supplies. Smartphone makers anticipate a shortage of materials.
Manufacturing down:
In China, manufacturing is slowed down as several employees are down with infections. Besides, since the Chinese New Year is around the corner, there would be further delays in cargo movement. Many Indian manufacturers are putting in bulk orders to secure sufficient stock.
The worst part is that no one can predict the exact impact of this Covid wave. According to epidemiologists, at this rate, about 60 per cent of the Chinese population will get Covid in the coming 90 days. This will further slow down manufacturing in China and disrupt the global supply chain. If the situation goes on, manufacturers will be forced to look for alternatives.
Global exports and imports under threat:
The new wave is affecting exports as well. China is the second-largest purchaser of diamonds from India. In November, India’s exports of lower and polished diamonds to China declined by 4 per cent over the previous year at about $1.25 billion. Exports of engineering items fell year-on-year by 58 per cent in November.
Since China is the biggest importer of commodities such as rice, cotton, wheat, corn, soybean, sugar, and cooking oils, the Covid situation in China will have an effect on global commodity commerce. Indian may put some restrictions on export and imports as well to keep domestic prices under control.
Meanwhile, India has resumed random covid testing for international passengers in the wake of this new surge. Reports say that three cases of Omicron subvariant BF.7, apparently the strain that causes the current surge in China, have been detected in India so far. The government also exhorted people to take precautionary doses, and wear masks in crowded places.
