Does India is planning to backstop its growing electronics sector by arranging to airlift components from China?

Highlights:

1. Manufacturing of Electronics products, especially smartphones assembly is a golden chance to improve India’s otherwise fading economy.

2. Two of the officials reported to Reuters that the Technology ministry has asked electronics and smartphone industry lobby groups to draw up a list of components made in China which then can be airlifted.

Coronavirus has been declared a global emergency, which took the lives of many people all over the world, especially in China. Recently, many smartphone companies denied participation at Mobile World Congress 2020 arranged in Feb due to Coronavirus Outbreak. However, India is planning to backstop its growing electronics sector by arranging to airlift components from China, three government officials said, as it tries to contain the fallout from the coronavirus crisis in China.

Emergency Airlift plan

India’s federal technology ministry has asked electronics and smartphone industry lobby groups to draw up a list of components made in China which then can be airlifted, two of the officials said.

After an extended shutdown due to the Coronavirus outbreak, China is slowly getting back to work. But the country is still facing a range of products and logistics delays. Electronics manufacturing such as smartphone assembly is the bright hope for India’s otherwise flagging economy. However, India is still relying on China for basic components required for the assembly of smartphones. Includes, display screens, camera modules, etc. 

The emergency airlift plans highlight the global supply chains’ interconnected nature as well, continued dependence on China for key goods even as some manufacturers prompted in some cases by the US-China trade war move to build up capacity outside of China. On the basis of this, other industries are exploring airfreight options too.

India’s role in Emergency Airlift plan

The auto industry in India is highly depending upon China for assembly parts like electronic components, fuel injectors, and pressure sensors.

As per the reports, the Indian Automotive Component Manufacturers Association has reached out to its members so that parts are in short supply will assess and can potentially be air-lifted. Also, the government adviser with direct knowledge of the matter reported that India’s embassy in China is coordinating an airlift of drug ingredients from China.

As per one of the government sources, “For the electronics and smartphone components, the technology ministry is in touch with aviation carriers and air freighters and they’ve been connected with the industry”.

“The airlifting of components from the Chinese cities of Guangzhou and Shanghai is one option being discussed”, the official said. However, the sources did not clear anything about when the airlifting might begin. The aviation ministry also did not immediately respond to a request for comment.

Import of Chinese goods has been lower down

Reuters has reported, Lack of truck drivers, a proliferation of road checkpoints and a shortage of workers at Chinese ports have slowed shipments even for parts that are still being produced. Also, Air cargo firms have reduced services in response to crew health concerns and uncertain demand.

All aware that China is the biggest trading partner of India, but imports of Chinese goods in India contracted in February to their lowest levels in nearly four years, trade ministry data reviewed by Reuters showed.

Scrambling in India

Indian Smartphone makers thus far have largely weathered the virus crisis, partly because they had made up inventories of Chinese-made parts to cover the Lunar New Year holiday period when factories in China shut down. But those stocks could dry up soon.

The co-founder of homegrown smartphone maker Lava Mr. S.N. Rai said, “the supply of some components had resumed, but the pace of production at his factory on the outskirts of New Delhi could soon slow down”.

Rai reported to Reuters, “The period between March 10 and March 20 is going to be very tough, in the absence of supplies, we might have to cut one or two of the three eight-hour shifts we have daily”.

Others are also scrambling for components

As per to two industry sources, the India units of contract manufacturers Wistron Corp, which makes some of Apple Inc’s lower-priced iPhones, and Flex Ltd have, through an industry body, asked for government help in securing components including camera modules and displays from China. However, Wistron and Flex did not immediately respond to Reuters’ requests for comment.

Oppo, a Chinese smartphone maker as well as Korean Samsung Electronics did not respond to requests seeking comment on their supply chains.

Coronavirus outbreak brought the uncertainty in Global Economy, especially the economy of China and developing countries like India. The global emergency affected the automotive sector of India. Also, now it is affecting the Electronics Manufacturing Industry of the country, which is the bright hope for the flagging economy of India. Let’s Hope, Coronavirus outbreak recedes soon so that all sectors reinstate its potential.