Neural Network – IRIS data Classification Model, Dr. Arunachalam Rajagopal

Corona and Global Supply Chain

 Arunachalam Rajagopal

During the year 2018-19, approximately 70 percentage of Indian foreign trade is accounted for by the top 20 countries. The United States of America, on top of the list being the first accounts for 10.42 percentage of total foreign trade by India during this period.  Second in the list, as shown in Table 1 is China which accounts for 10.31 percentage of the total foreign trade. It is worth noting that the top ten countries, as per the list shown in Table 1, accounts for 50 percentage of the total trade value in dollar value.

Table 1: Foreign trade - Top 20 country’s list

Source: Government of India Commerce Ministry website

Global trade routes

The global trade routes when considered in in a very broad manner are Trans-Pacific, Asia-Europe, and Trans-Atlantic. The more specific major global trade routes are shown in Table 2. Many of the countries involved in major trade routes are infected with Corona Virus.

Table 2: Major global trade routes               

China	ßà	North America
China	ßà	Western Europe
Far East	ßà	Western Europe
Far East	ßà	North America
North America	ßà	Western Europe
North America	ßà	South America

Supply chain disruptions

The main Indian exports and imports are mineral fuel, mineral oil, gems and jewelry, electrical equipment, nuclear reactors, boilers, organic chemicals, plastics and plastics articles, iron and steel, animal fats and edible oils, optical and photographic equipment (including cinematographic equipment), precision and surgical instruments, inorganic chemicals, aircraft and space crafts, fertilizers. India is self sufficient w.r.t food, fruits and vegetables, and milk. This makes the country more robust. However, the country imports mechanical, electrical, and electronics components and systems as input for manufacturing and assembly activities in India. This makes the supply chain vulnerable to calamities like Corona virus.

Corona Virus Effect

The world countries which contribute to the major portion of global trade are infected seriously by the Corona virus. Many countries have shut down the manufacturing activities. This is bound to have an adverse effect on the global supply chain. The reaction to this will be reflected in the form of increased prices of products and/or product unavailability.

Around 55 percentages of the top 20 countries in the foreign trade list are seriously infected with Corona virus. India’s foreign trade with countries such as China, Iran, South Korea, Germany, France, USA, Japan, Switzerland, Netherland, UK, Belgium, Qatar, and Singapore will be impacted seriously by the spread of Corona virus.

Sourcing Hiccups

Supply chain experts could no longer advocate single sourcing (one supplier for each component) as strategy for components and parts required as input for assembly lines / manufacturing units. In fact, it could be more wise to have two or more (not too many) suppliers located across continents (risk management).

Global Supply Chain Responsiveness

The adverse effect of calamities like Corona attack could be mitigated by making the global supply chain more responsive through the following steps:

1.         Restoring economic activity (both manufacturing  and service) at the shortest possible time

2.         Re-design / re-orient the  supply chain for adapting to the changing global requirements / emergencies

3.         Purely sanitized Supply chain should be ensured not only for food and pharmaceuticals but across all products.

4.         Regional cooperation among the trade blocks and political forums  such as SAARC, ASEAN, NAFTA, etc.

Author can be reached at:  arg1962@gmail.com   mobile: 8220569036