The coronavirus is making India take extreme steps to save its smartphone industry
India needs the products it gets from China, and the country is now doing whatever it has to do.
Stores are running out of basic goods across the country as the coronavirus disrupts supply chains around the world, and countries are trying to figure out how to get the products they need from the countries that manufacture them. With many ports in China closed or congested, India has decided it's going to skip the ports and fly products it needs directly out of China.
As Reuters reports, India's electronics sector and smartphone makers are running out of components they get from China, so India’s federal technology ministry is having companies that manufacture electronics make a list of components they need so they can be airlifted out of China. India gets components like camera modules and display screens from China, and these disruptions in the supply chain are hurting one of India's most valuable industries.
The Automotive Component Manufacturers Association of India is also assessing if it can get electronic components and other products airlifted out of China. China is India's top trade partner, so disruptions in the supply chain that the coronavirus, or COVID-19, have caused have been a serious problem for the country.
Rachna Shah, an associate professor of supply chain and operations at the University of Minnesota, tells Inverse that India's plan is smart.
"It makes absolute sense. It seems to me they are trying to get ahead of the curve," Shah says. "If you think about the risks that most supply chains are facing, there's a transportation risk because ports are closed or very congested, and there is a supplier risk—meaning suppliers are not able to fulfill demand very quickly—and the long lead times they're worried about."
Shah says airlifting products out will help reduce lead times and make sure India's manufacturers don't run of the components they need to meet demand. She says it also means India may be able to meet demand other countries aren't currently able to meet.
"There is increasing demand that we can see—at least for some components and products—and there is immense uncertainty on the supply side," Shah says. "We don't know how much suppliers will be able to supply, we do not understand the quality or the quantity or the timing."
A major part of this supply chain problem is that people are panicking, Shah says, which is causing them to hoard goods. Shah says this happens every time we have a health emergency, but it's been particularly bad this time around. She says social media and the 24-hour news cycle are part of the reason people are panicking so much.
"I realize it's very important to cover this, but the 24/7 coverage I think results in a more extreme reaction," Shah says.
Shah believes another problem is that our supply chains have simply become too long and dispersed. She says countries are getting products from all over the world, and it means there are long supply chains that are more easily disrupted.
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"I think this is a very good time to look at how long or dispersed our supply chains have become over time," Shah says. "This may be a very good time to think about the impact of these dispersed supply chains and maybe a good time to look at reducing the length of our supply chains."
That doesn't mean we have to become insular countries that don't trade with anyone, but perhaps there's some room for us shorten supply chains where we can. In the meantime, tech companies that rely on China to manufacture their products are going to have a tough road ahead.
The Inverse analysis
Our smartphones are already very expensive, so we can't imagine how expensive they'd be if we made them here are home, but it's clear the tech industry has a problem on its hands with China's ports being closed or congested. As Shah said, it's important that people don't panic over the coronavirus, because people hoarding products has a ripple effect that impacts many different industries that rely on the same supply chains. It's ok to stock up on some things, but let's all try to stay sane.
