Prof. Manoj Pant, Director, Indian Institute of Foreign Trade opines that while this three-week countrywide lockdown is not going to harm Indian exports in a major way, the country’s exports are likely to suffer from world recessionary issues that preceded the global health pandemic.
TPCI: What impact will the three-week lockdown have on India’s supply chain in terms of import of raw materials? What impact will it have on the domestic market?
Prof. Manoj Pant (MP): In the lockdown all industrial activity is at a standstill, barring food production and medical supplies. So, one expects decline in demand for raw materials except for these two sectors. However, since this is probably true in many other parts of the world one can view this as a temporary stoppage in demand, which should resume in the near future.
TPCI: What repercussions will the halt of manufacturing activities have on Indian exports?
MP: There are several Covid-19 issues in many of the buying countries. As far as I am aware, the Department of Commerce is actively pursuing any hindrance to exports arising out of misconceptions on the part of buying countries. The Department is also actively pursuing any issues of domestic logistics hindrance arising out of the lockdown. To that extent, the three-week lockdown will have a limited impact on exports. Exports, however, will continue to suffer from world recessionary issues which preceded the lockdown.
TPCI: Although the government has assured the nation that the supply of essential commodities will not be affected, the industry anticipates developments like a spike in food prices and dearth of medicine supplies due to the difficulties in transportating them from the field/factory to the markets. Are these fears misplaced?
MP: Much of the spike initially was due to panic buying, which is normal in such circumstances. As far as I am aware, supplies are now quite normal as all delivery agencies including the e-commerce players are slowly returning to normality.
TPCI: What does this present crisis portend for the future of an already damaged multilateral trade framework?
MP: This crisis is quite irrelevant to the multilateral process. However, the international cooperation shown in the medical crisis might actually revive multilateralism.
TPCI: How do you see the supply chains and trade linkages getting restored once the crisis is over? How much time should it take, and how would India need to strategise its international trade going forward?
MP: This is a medical crisis and the driving sentiment is fear, which is not an economic factor. I think once the crisis is over, there may well be a feeling of euphoria and all economic links would be very quickly restored, at least to the extent before the crisis.
TPCI: Covid-19 has shown the importance of greater indigenous capabilities in an area like APIs for instance. Which sectors do you feel India should work on for building its indigenous capabilities now and how can it be done?
MP: This is very important. Even before the crisis, the Indian dependence on countries like China for crucial APIs was being deliberated. Most important example is insulin (critical in diabetic medicine), 70% of which is imported. The government had already started encouraging domestic production of this even before the crisis started and I believe that this should be accelerated.
Manoj Pant is an Indian expert in International Trade. He is the Director of Indian Institute of Foreign Trade since August 2017. Previously, he was a full-time professor at the Centre for International Trade and Development, Jawaharlal Nehru University, where he taught international trade theory.
