COVID-19 pandemic has changed the nature and way trade will evolve. The effect on trade is already noticeable. A supply shock as China closed its factories was noticed with container ships sailing from China being blanked (suspended). As this shock lessened a demand shock started with shops across Asia, Europe, and the US closing their doors. Economists are comparing the lockdowns with the financial crises of 2008-2009 and the great depression of the 1930’s. The World Trade Organization (WTO) has predicted that world trade is going to fall between 13 to 32%.
The global institutions are trying their best to mitigate the impact of the pandemic on the world economy. Many countries are focusing their efforts on restarting their businesses and protecting their vital and essential supplies during this and future pandemics.
Policymakers are already turning their minds to seek long- term lessons from the pandemic. They have looked deeply into understanding some common interpretations. How can they ensure the availability of essentials in future crises? Can this be achieved by protecting what they think are critical domestic industries? They have come up to see short and diverse supply chains as a potential policy response. China plus one or two supply chains are in vogue. For India, rising global uncertainties related to existing supply chains may bring a collection of opportunities. The right policies to attract production are required to take advantage of the opportunity. When this lockdown is lifted gradually, the government plans to push forward its Make In India program. Prime Minister Narendra Modi wants to initiate the concept of Atmanirbharata, which means the goods made in India should be made for the world. India faced a deficit of $15 billion on the merchandise trade account in 2019-2020 and a surplus of $83 billion in the service trade account.
COVID-19 has also accelerated the adoption of digital technologies to minimize human interface and maximize transparency in information which is being shared across the logistics chain. This means reducing time delays and mistakes making the supply chain more robust and keeping trade flowing physically through virtual support.
According to my point of view, trade in India will decrease and the economy may contract. Because as the Prime Minister is promoting make in India, India’s economy will not fall as far and start rising rapidly. After this pandemic and its effects pass, the trade will grow and India’s manufacturing will grow more powerful than before if it becomes Atmanirbhar. A few examples that we can look to today that will represent the future are:
- Morbi in Gujarat is looking to replace China and become the hub for global toy giants.
- Uttar Pradesh Rojgar Abhiyan for migrant workers that can boost local entrepreneurship and create employment opportunities.
Quote from the Global Times editor reacting to India banning 59 Chinese apps took a dig at India tweeting, “Well, even if Chinese people want to boycott Indian products, they can’t find many Indian goods. Indian friends, you need to have some things that are more important than nationalism.” The M&M chief in a reply has called the stinging statement a “motivating, rallying cry for India Inc.”. One we need to respond to! I suspect this comment might well be the most effective & motivating rallying cry that India Inc. has ever received. Thank you for the provocation. We will rise to the occasion,“Mahindra tweeted”