Covid-19 pandemic has brought almost every great economy to standstill and India is no exception.
However, if India prepares a holistic blueprint for the revival of the economy, 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 measures of the government 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” of China.
China was the first country across the world that observed lockdown due the spread of the virus. Some of its gigantic manufacturing hubs witnessed complete halt resulting in the disruption of some of the largest supply chains.
Consequently, as a measure for reducing the dependency on the country, many global firms are planning to diversify their manufacturing units outside China.
On the question of de-risk plans of multinational companies, UBS in a recent report stated that India is the top destination for the 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 which always remains in cash crunch.
If we are able to protect the sector from complete devastation post the lockdown gets over through a holistic approach and dynamic policies of the government, we can definitely attract a great percentage of the Chinese market.