Let’s just sit back and think about the
demand for e-commerce websites and supplychains in amidst the times of corona. Everyone wants everything on their doorstep that’s all cool and fine until you come to know that your groceries are being delayed even by the highly overpriced hand sanitizer (can’t live without that right?), just because your vendor had a bound to happen to fight with his overly inflated and bullying wholesaler. But now let’s look at the macro picture and repicturize what would happen if this scenario takes place country and whole industry wise. The automobile industry exports have sunk to about 70% because of the clearance delays of all the tool parts that are imported from China and in turn delaying the manufacturing process chain.
Why the manual checking of all shipments from China?
The answer is quite logical and in front of our eyes the border issues between India and China and the
LAC clash has resulted India in a tough spot as #boycottchina is a really big thing now and undoubtedly all the products that are currently imported from China are under heavy scrutiny and backlogged by the clearance departments at airports and even the seaports. The things are so riled up and out-of-order that all of FedEx cargo shipments of 2-3 days prior are still not clear and while questioning Mr faisal (senior FedEx officer) he said “There is a huge pile-up of shipments, resulting in a backlog and we are trying our best by talking to the Customs officials. We don’t know how long it will take” To kick things up a notch DHL logistics has already from a few days suspended all its order from Mainland China, Hong kong and Macau.
Implications on the Automobile industry.
This is one of the fastest growing sectors in India with valuation of over $118Bn as of last financial year of which around 5% goes to the components that go into it. But the integral and I would say the most sad thing is that manufacturing and the value chain of the automotives are so highly dependent on one thing and other that even a small missing piece could stop the whole making of a given car or two-wheeler.
Here is where the heavily delayed shipments from China come into picture. Deepak Jain (president of
Automatics component manufacturers association) points out that some of the parts imported from China are of heavy and urgent requirement in the supply chain. The other problem is that the aforementioned parts are not produced domestically at a competitive price. This delay has also led to a great dip in exports for example the auto exports to U.S has gone down by 97% to $1.37 million and as well as exports to Mexico has dipped by 65% to $43 million last month. During this quarantined time Mr Rajan Wadhera president of Society of Indian Automobile Manufacturers quoted “The industry is piecing itself together as growth is limping back; any further disruption at this juncture is best avoided.”
UNEXPERT’S OPINION
As all black clouds have a silver lining(does it?) this is the perfect opportunity for the markets in India togrow and develop integral parts that China exports domestically and on an economic level that match the world standards. Until then the option is to import parts from another country till the time being at a little higher price or from domestic sellers at an even higher price and just hope that the public understands the gravity of the situation. OR wait for the wholesaler to come to his senses (not gonna happen right?)
-By Devansh Gandhi
Reference:
Content Reference:
https://www.thehindu.com/business/Industry/auto-exports-tumble-73-on-lockdown-delayed-orders/article31948164.ece
https://www.thehindubusinessline.com/economy/logistics/fedex-halts-shipments-from-china-to-india-as-customs-clearance-delays-bite/article31960407.ece
Image Reference:
https://economictimes.indiatimes.com/thumb/msid-75280772,width-1200,height-900,resizemode-4,imgsize-48084/india-china-trade.jpg?from=mdr
https://www.thestatesman.com/wp-content/uploads/2017/08/1500877673-india-china-getty.jpghttps://www.thestatesman.com/wp-content/uploads/2017/08/1500877673-india-china-getty.jpg
