India least vulnerable to coronavirus in Asia: Nomura

Mumbai: India stands as the least vulnerable to Covid-19 or coronavirus in Asia according to a report by Japanese brokerage firm Nomura while China's GDP growth may dip to 3 per cent in the first quarter.

 But supply disruptions of Chinese imports in India may affect domestic production but India could also benefit from lower commodity prices and less competition from cheaper Chinese imports, analysts from Nomura said.

"It is not a part of the global value chains centered around China, it is less dependent on China for visitor arrivals (2.7 per cent of total visitors) and China accounts for only 5.3 per cent of its  total exports. These factors should limit the indirect impact on India," Nomura said in a note.

However, China accounts for a much larger share of India’s imports (14.2 per cent) and any disruption in China’s production will result in lower imports of primary and intermediate goods into India and disrupt domestic production, the report said.

Over 60 per cent of Chinese imports into India comprise electrical machinery & equipment, nuclear reactors & boilers and organic chemicals, with an additional 7 per cent in the form of plastic articles and fertilisers. A disruption in these imports will adversely affect key industries such as pharmaceuticals, autos, electronics, solar and agriculture, and could lead to higher prices if inventories are depleted.

On the positive side, India should benefit from lower commodity prices, and domestic textiles, fertiliser and MSME firms should benefit from less competition from cheaper Chinese imports.

In the absence of an early check on the spread of the Covid-19 outbreak, the drag in the Indian economy in the first quarter is likely to intensify, with the risk of some factories halting production lines owing to input shortages.  The deeper slowdown in global growth is likely to weigh on exports and investment growth, Nomura said.