Coronavirus (COVID-19) spread is the biggest threat to the world and the global economy in nearly a century. The virus that originated in China has infected people globally, with several countries and major cities going under lockdown, imposing quarantine measures on the entire population. This has confined citizens to their homes except for essentials and effectively brought normal life to a halt in India as well.
While organizations have rolled out mandatory work-from-home policies to prevent the spread of COVID-19, malls, shopping centres, movie theatres and all public places are temporarily shut in an effort to prevent community transmission of the disease. These limitations are leading to a slowdown in business across all major industries (with the exception of healthcare services) and small business owners are struggling to deal with the situation.
Like most of the sectors, including manufacturing, the mobile phone industry has also been severely impacted by the pandemic and the lockdown that has followed it. With the consumption of such products and services going down, revenues of the companies will soon start to dry up, placing the jobs of millions of workers at a huge risk.
The mobile phone industry in India is also facing the heat and has a rough ride ahead due to the COVID-19 outbreak. India’s share in global smartphone production is set to fall to the levels seen four years back, as factories have halted manufacturing activities due to the lockdown and demand is likely to stay weak till at least July 2020.
It is important to understand that the mobile manufacturing in India was more of an assembly-line scenario rather than full-scale manufacturing, largely dependent on imports of displays, components and semi-knocked down (SKD) kits from China. Only around 10% of the components were indigenous. The business situation can become unfavourable for the mobile phone manufacturing, trading and service ecosystem in India if the current situation persists.
The import and transportation of various components for assembling mobile phones, tools and dies, machinery and robotic equipment are badly affected and there is no certainty for how long this situation might prevail. Electronic component supply chains that were heavily dependent on China and other South-East Asian nations have been severely impacted. The most important resource required for building technologically advanced products—qualified and trained manpower—are scared to even step out of their homes.
The COVID-19 outbreak has presented new and unmapped roadblocks for the India mobile phone and ESDM industry, causing a disruptive impact on players both large and small. There is an urgent need to take firm steps to address the pain areas of industry, channel partners and service establishments. To support the industry the government needs to ensure ease of doing business, provide support to small business for maintaining cash flow and announce relief measures for corporate taxes to enable liquidity management.
Improve ease of doing business, resolve regulatory bottlenecks
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