As China continues to batter rising cases of the Covid-19 virus, the Indian economy is also feeling the heat. The consumer durable industry has decided to stock up on raw materials in order to deal with any sort of supply disruption from China. Usually, factories used to maintain an inventory of only a month, but seeing the situation, they are now keeping a stock of at least 2-3 months.
The New Year holidays in China will begin in mid-January and the importers are worried that if the cases and deaths continue to rise, the factories in China may not resume their full production by February and that may cause supply disruptions in India.
The production of electronic products like air conditioners or LED televisions can be impacted as a high proportion of these components are sourced from China.
“Till now the supply chain (from China) is fine and not impacted. Our suppliers are assuring us about delivering on time but we are keeping our fingers crossed and putting everything under the lens,” Dixon Technologies Vice Chairman and Managing Director Atul Lall told news agency PTI.
Another senior executive of a company informed that the appliances industry is working on reducing its dependence on China for the import of components.
“But still there are some categories like air-conditioning, where the dependence on China is very high. Close to 40 to 45 per of the components of an air-conditioner (by value) come from China. Compressors form a big part in that,” Godrej Appliances Business Head and Executive Vice President Kamal Nandi said.
Nandi expressed concern over the Covid-19 situation post the new year holiday period.
“If they dispatch after the new year holidays, we will not get it by March. Most of the components are in transit… but if post-New Year holidays, challenges of Covid continue and operations (of factories there) could not start in full swing, then we will see challenges in the June quarter, specifically in categories like air-conditioner,” said Nandi. “We are very watchful as of now.”
Currently, everybody in the market is chasing suppliers and according to Consumer Electronics and Appliances Manufacturers Association (CEAMA), things are in a state of “flux” and everyone is chasing suppliers for getting components delivered on time.
“It will vary from company to company as to which one is sourcing from India or importing. Most of the manufacturers would be chasing their suppliers in China to get their material dispatched before the Chinese New Year, which will help them to take care of their February production,” CEAMA President Eric Braganza said. PTI