Due to the spread of coronavirus infection and 21 days lockdown, most of the industries are expected to suffer a decline in their growth, excluding the country’s FMCG sector. The credit rating agency has prepared a report on the impact on the care rating industry. According to this, the sectors that are already facing difficulties like auto, hotel, and tourism will suffer more. The tourism industry may suffer a revenue loss of Rs 1.25 lakh crore this year. However, the growth of the FMCG sector will accelerate due to increased demand for daily necessities, sanitizers, and cleaners.
let’s Understand the impact on seven major sectors in this way –
1. Auto: 8.6% import of cheap transport equipment from China will be affected.
25-30% of the tires in the country’s auto industry come from China. However, due to the coronavirus lockdown in China, the supply will be difficult. The cost of importing from other countries will increase and this will also increase the time period. Talking about exports, only 0.5% of the transport equipment from India to China is exported. Whereas, America and Europe share 80%. Whereas, in the last financial year, India imported 8.6% of the transport equipment from China. Work has not yet started in China’s industry. It will take about 6 months to recover completely. In such a situation, the import of about 800 million dollars (60 thousand crores) of the country’s auto industry will be affected. This will be 40% of the transport equipment imported in 2018-19. The industry is already facing a recession and Employment of the contractual workforce is also in danger as 50% of contractual workers work in the auto industry.
Transport Equipment: Import of India in last 3 years:
year and Import in Rupees
2016-17; 1.60 Lakh Crore
2017-18; 1.62 Lakh Crore
2018-19; 1.84 Lakh Crore
India’s exports in the last 3 years:
year and export in Rupees
2016-17; 1.43 Lakh Crore
2017-18; 1.40 Lakh Crore
2018-19; 1.50 lakh crore
2. Aviation: The number of Passengers will not increase even after the lockdown is over.
Due to the lockdown in the country till April 14, airlines have run out of cash. Even after the lockdown is over, the number of passengers will be very less, so the fair will have to be kept low. In these conditions, the negative passenger growth can go from 20% to 25% in the current financial year (2020-21). Passenger growth in 2018-19 was 13.7% while 3.7% in 11 months of 2019-20.
Impact on Domestic Airlines:
these figures show the passenger traffic and passenger growth in the following years:
2018-19, 12.9 crores ,15.1%
2019-20, 13.4 Crores, 3.7%
3. Hotel-tourism: The average fair will be reduced from 30% to 40%.
The January-March quarter has already been disappointing for the hotel industry due to Coronavirus. Occupancy rates of hotel rooms may come down by 40% this year. It will have more effect on April-September. The average room rent is expected to decrease by 30% to 40%. The room available on revenue will decrease by about 58% to 64% this year. Most of the summer vacation bookings in the country have been canceled. The hotel industry’s revenue in 2018-19 was Rs 10 thousand 30 crores with 3.5% growth. Hotels have a higher share of foreign tourists, food, and beverages in revenue. But, due to coronavirus, this segment will be significantly affected.
these figures show the room occupancy rate, Average Room Rate and Revenue/ available room
2018-19- 66.7% ; 5,973; 3,981
2020-21 -40%; 3,600-4,200; 1,440-1,670
On the other hand, the tourism industry is estimated to have a loss of revenue of Rs 1 lakh 25 thousand 550 crores this year. In 2019, 1.09 crore foreign tourists visited the country. The sector had an income of 2 lakh 10 thousand 971 crores.
4. Media and Entertainment: Advertising will decline, there is a 45% share of advertising in the revenue.
The lockdown will benefit segments such as digital, online, gaming, radio and Over the Top (OTT). But, TV, print film-entertainment, live events, and outdoor media will suffer. The movie theater sector is expected to a loss in revenue of 5 thousand 800 crores to 7 thousand 800 crore rupees every month.
Events like Olympics, Hockey Pro-League, Asia Cup, IPL cancellation or moving forward will affect the advertising industry. Advertising contributes 45% to the media-entertainment sector’s revenue. Due to the cancellation of events like IPL, there will be a loss of income of 120 crores to 150 crores on the sales of tickets.
5. Drugs and Pharma: cheaper goods will not be available, the export will also decrease.
Indian pharmaceutical companies are relying on China for key-starting materials (KSMs) and active pharmaceutical ingredients (APIs). After the decrease in cases of coronavirus in China, the pharmaceutical factories there have started, but are not working with full capacity. Hence supply will be affected in India for the next three months. This cycle can last for 6 months. In such a situation, the possibility of medicines becoming expensive will also increase. Coronavirus has spread worldwide. Therefore, not only the import of the Indian pharmaceutical industry will affect but this will also affect the exports of the industry. India pharmaceutical industry’s 40% of the export revenue comes from the countries that are in lockdown. In such a situation, the pharmaceutical industry will not be able to get benefited from export. The government has also banned the export of 26 APIs.
6. Education: not much effect.
The lockdown will not have much impact on the education sector. Because most institutes have already charged fees till March. However, the institutions that delay the fee collection and those who depend on government support are likely to be affected. Because the central and state governments are dealing with coronavirus. The new session in schools starts in April, but schools are closed until April 14 due to the lockdown. If the lockdown increases further, there might be a problem of cash in the short term, due to a lack of fee collection.
7. FMCG: Increased demand will benefit.
The spread of coronavirus infection and lockdown has led to a growth in the sales of e-commerce companies and FMCG companies making daily necessities. Production of consumer goods and food products companies also increased in January. Production of items such as sanitizer, cleaner, increased by 61% in January. Production of hair oil increased by 13% while that of shampoo increased by 12%. Peanut, soybean and rapeseed oil production increased from 30% to 99%. The figures for February and March are also expected to be the same due to the continuous rise in demand. This will benefit the FMCG sector.