The chief of India's apex bank on Wednesday said that India needs to "keep a very close watch" on the impact of the Coronavirus outbreak in China.
Calling for close monitoring of the emerging situation across the globe, Reserve Bank of India (RBI) Governor Shaktikanta Das said:
"It is definitely an issue which needs to be closely monitored by every policymaker, whether in India or any other country. Every policymaker, every monetary authority needs to keep a very close watch."
Das pointed out on Wednesday that segments of Indian industry including pharmaceuticals, mobile handsets and electronic manufacturers are dependent on China for the import of raw materials, while also insisting that the Indian pharmaceutical sector's raw material supply will be "maintained".
"Most of the large pharma companies, according to information that we have, always keep stock for three-four months. So, they should be able to manage, and the virus outbreak has not impacted those provinces from where these pharma intermediates are sourced. Therefore, there is an expectation that the supply of raw pharma- materials will be maintained," Das said.
Indian drug makers import almost 65-70 per cent of their Active Pharmaceutical Ingredients (API) - the basic building blocks of drugs - from China.
Even though the current stocks should last until April, the Indian government held a high-level meeting on domestic manufacturing of API on Wednesday. The meeting was anchored by the government think tank Niti Aayog with various departments and representatives of the Indian pharmaceutical sector.
According to government sources, the Indian government will soon come up with a comprehensive API manufacturing policy.
Makers of mobile handsets, TV sets and certain other electronic products in India are also dependent on China. "There again our manufacturers must be able to develop alternative places of sourcing these raw materials," the RBI chief maintained.
"I think there is evidence that already our manufacturers are discussing this with other countries in the Asian region. So, if they can quickly access raw materials from these other countries, then to that extent, the problem on our manufacturing will be contained," he observed.
China accounts for 45 per cent of India's total electronics imports. One-third of machinery and almost two-fifths of organic chemicals that India purchases from the world comes from China, according to the India's Federation of Indian Chamber of Commerce and Industries (FICCI), an association representing Indian business organisations.
"Automotive parts and fertilisers are other items where China's share in India's import is more than 25%. India sources about 65-70% of active pharmaceutical ingredients and close to 90% of certain mobile phone parts from China," the FICCI said in a representation to the Indian finance ministry on 16 February.
Indian Finance Minister Nirmala Sitharaman on Tuesday held a meeting with industry and trade associations, seeking feedback on the problems and supply chain issues resulting from the coronavirus outbreak. She is also likely to hold an inter-ministerial meeting on Thursday on the issue.
On the global impact of coronavirus, Das said global GDP and trade would be affected in the wake of the outbreak of coronavirus due to the large size of the Chinese economy. "Coronavirus will definitely have an impact on the global GDP and global trade," the RBI Governor added.