Global Companies’ Local Factories Shut down
India, the world's largest market after China, has begun to shut down production facilities due to the spread of the COVID-19 virus.
"There will be a total ban of coming out of your homes," India's Prime Minister Narendra Modi said in an announcement to the Indian people on March 24.
The Indian lockdown order is expected to jolt the global supply chain once again. As India has the world's second largest population and has a huge domestic market and serves as a production base for multinational companies, it may give a blow to major industries such as automobiles, electronics, mobile phones, and textiles.
The outing ban in India with a population of 1.3 billion is the largest scale in the world as it affects one-fifth of the world's population.
Indian health authorities have reported 469 confirmed cases and 10 deaths in India. So far, no certain region has been hit hard. However, the Indian government has taken the preemptive action as India’s population density is so high that the spread of the epidemic can spell a disaster at an unthinkable level.
The Economic Times in India reported that Taiwan's Foxconn and Wistron have begun to stop production of all Apple products in India in accordance with the ban. The Hindustan Times reported that the ban would hurt the automobile industry more as if to rub salt in the wound.
The Indian automotive industry has been struggling with a decline in demand since it has not been able to get parts due to the spread of the virus in China earlier this year. In addition to passenger cars and commercial vehicles, motorbike inventory has climbed due to a decrease in demand. Motorbikes are popular among Indians.
Mushrooming COVID-19 cases in Bhilwara, the center of the Indian textile industry with approximately 250 textile factories, have halted those factories since March 20 so a panic is rampant among people and India is feared to become a second Italy, the BBC reported. India's shutdown has also threatened to disrupt the global drug supply chain, CNBC reported on March 24.
In the global pharmaceutical supply chain, key ingredients are manufactured in China with the United States predominantly holding patents for various pharmaceutical products. Finally, in India where labor costs are low, such key ingredients go into finished products and then sold to the global market. Experts say that more than half of the world's generic drugs are produced in India. However, they point out that India's lockdown can lead to a shortage of final supplies and a surge in prices due to production disruptions.