The covid-19 pandemic has brought almost every excellent economy to a standstill, and India is no exception.
However, India has prepared a holistic blueprint for the revival of the economy. In that case, it can prove to be a good alternative for the Chinese market, believes co-founder of Jabong Praveen Sinha.
While speaking on the impact of the lockdown on the MSMEs in India, he said, "What happened during the lockdown in China was that many of the global companies, which were 100 per cent dependent on China for sourcing, realised that it is a concentrated risk and they need to diversify."
While appreciating the government's measures in containing the spread of the virus at an early stage, Praveen says that if the government shows the same resilience to form policies safeguarding the private sector, "India can be promoted and placed as an alternative" to China.
China was the first country in the world to observe a lockdown due to the spread of the virus. Some of its gigantic manufacturing hubs witnessed a complete halt, disrupting some of the largest supply chains.
Consequently, as a measure of reducing the dependency on the country, many global firms plan to diversify their manufacturing units outside China.
In a recent report on the question of de-risk plans of multinational companies, UBS stated that India is the top destination for some of the largest firms planning to move out of China.
It stated that the process has already started, as the FDI in India has almost doubled to $175 billion from $87 billion last year.
Moreover, the president of the US India Business Council, Nisha Desai Biswal, recently said that after the coronavirus pandemic gets over, India has "an opportunity to build an economy that is more resilient, that is more diversified, and that is more attractive to more global manufacturing and global services,"
Having said that, Praveen, in his interview with Businessworld in late March, cautioned the government about the implications of the extended lockdown on the MSMEs.
He said, "If it gets extended, then I think the small businesses, especially the ones that had tight cash flow even before the COVID-19 happened, will probably have to shut down."
MSMEs are the backbone of the Indian economy. India can present itself as an alternative to the robust Chinese supply chain only when it strengthens the MSME sector, which is said to be the one that always remains in a cash crunch.
Suppose we can protect the sector from complete devastation after the lockdown gets over through a holistic approach and dynamic government policies. In that case, we can attract a significant percentage of the Chinese market.