India is one of the least-affected countries in the Asia region from the COVID-19 outbreak when direct channels of tourism and trade are considered. Only 2.7 per cent of India’s total inbound tourists in 2018 were from China and 5.1 per cent of India’s total exports went to China the year ending March 2019.
Consequently, the adverse impact on India’s GDP via these two channels was estimated to be a modest 0.04 per cent of GDP, the lowest among Asian economies. Delving a little deeper, we find that of India’s top six export products in fiscal 2019, the two categories of ‘mineral fuels’ and ‘organic chemicals’ were also the top two exported groups to China in the same year.
However, only 6 per cent of India’s total ‘mineral fuel’ and 18 per cent of its total ‘organic chemicals’ exports in that year were bound for China. Therefore the sector most exposed is ‘organic chemicals’, although it has constituted less than 5 per cent of India’s total exports on average since 1990.
The rest of the top categories had minimal exposure to China’s demand, thereby highlighting the limited risks to India’s exports from the current outbreak.
From another perspective, among the top five exported product groups to China in fiscal 2019, only ‘mineral fuels’ and ‘organic chemicals’ stood as important categories in India’s total exports.
The other three categories of ‘cotton’, ‘ores and slag’ and ‘plastics’ make up less than 5 per cent of India’s total exports to the world.
It’s clear even if these industries were to experience lack of demand from China in the near term their contribution to India’s overall exports remains fairly limited.