Indian Markets Face The Heat As China Lockdowns Hit Global Supply

As COVID-19 outbreak spreads in more and more cities in China, lockdowns across the country are disrupting global supply chains and causing a spike in freight rates. Indian markets, which import goods worth billions of dollars from China every year, are starting to face the consequences.

The Lajpat Rai market, Asia's biggest electronics wholesale market in Central Delhi, is feeling the pinch of supply chain disruptions from China as a result of its recent COVID-19 outbreak. From LED TV panels, speakers, cables, connectors India imports around 9 billion dollars' worth of electronic components across sectors from China each year.

But with lockdowns in China's tech and manufacturing hubs like Shenzhen and lack of manpower for shipping, Indian markets are facing the heat.

"Our market has been affected manifold. There are certain goods we are unable to get from China. Even ready products are not being shipped because there is no labour. Freight charges have gone up 3 times. Charges of containers have gone up. The bulky goods like LED TVs, panels, home theatres and speakers are becoming costlier to ship. If the cost of getting 100 LED panels shipped was 900 dollars earlier. It is now 3,000 dollars. The cost of shipping has gone up 3 times," Rakesh Arora, Vice-President of Central Radio and Electronics Merchants Association (CREMA), told NDTV.

Most of the TVs sold in India are in the budget segment which means that a major increase in TV prices is unlikely, but even a slight hike from the manufacturers' end in the upcoming days could impact low-income customers.

Vishwanath Kapoor, another trader in the Lajpat Rai Electronics market, said, "Supply chain has been affected in the last 2 months. If we ask for 25,000 pieces of an item, we only get 5,000-7,000 pieces of it. In some cases, the factories are shut. In others the ports are shut or ships are not available."

India imported goods worth $97.5 billion from China in calendar year 2021, up 46.1% from 2020. Key imports from China include parts for electrical instruments, automobiles, smartphones, telecom, chemicals and fertilisers.

India is heavily reliant on China for importing semiconductors, also known as chips. Semiconductors power everything from smartphones to computers, advanced medical equipment and modern cars. 26% of India's imported automobile components come from China.

While automobile manufacturers are mum on the semiconductor shortage, experts say the ongoing crisis will lead to longer waiting lines for purchasing cars.

"The lockdown last year had already led to all semiconductors being diverted to home appliances since everybody was at home. When the market came back for automobile sector the quota had already been consumed. It may be a small part but it takes 35-40 days for a semiconductor to mature. Very few countries like Taiwan and China make that item.

"Raw materials for the semiconductors have also reduced. For the time being there is an acute shortage of semiconductors. The car manufacturers do not want to tell the consumer about it but the waiting queues for several cars are getting longer because of this. Even luxury car manufacturers are affected by the shortage of semiconductors," Tutu Dhawan, an automotive expert, said.