“In the midst of every crisis, lies great opportunity!” has never been truer than the current COVID-19 pandemic. As an extension, it could also be said that greater the adversity, greater will be the opportunity, particularly for a diverse country like India.

There is a great danger that world economic growth could take a beating due to the virus as China accounts for 12 per cent of world’s GDP growth rate. There could be severe indirect impact on many producers (outside China) who source their raw materials or components from China. Economists also predict that the virus outbreak in China could reduce global GDP by almost 0.3 per cent. This puts global growth at risk and foreign entities who have investments in China may decide to park their money elsewhere.

Spotlight on India!

However, economists say the disruption caused by the virus in China could pave way for more foreign investments in emerging economies like India, Bangladesh, and Vietnam as the world looks to reduce dependency on China, the largest manufacturing hub in the world.

Experts feel that India has a good chance of becoming an attractive manufacturing hub from the present situation, provided the government tweaks some of its trade policies to bring down commodity prices.

Global companies are always looking to diversify their sources of supply and India has always been up on their radar. Vietnam has gained a huge growth boost due to higher density of electronics manufacturing. Trade analysts expect more investment opportunities for emerging economies in the backdrop of the coronavirus outbreak in China. It now remains to be seen whether the government can ease policies and pitch India as a strong investment destination for major companies around the globe.

This global pandemic of Covid-19 helps us in questioning the inevitable rise of China, not just as an economic but also geopolitical power. The Chinese government claims to have contained the virus and is starting to help other countries during the crisis. However, it is their myopic thinking riddled with a characteristic lack of transparency that has brought the world to a standstill in just a span of a few weeks.

In this context, India is very well positioned to help build a more dynamic and sustainable world. Based on the Global Competitiveness Index, India is the most competitive country in South Asia. India has a competitive advantage in the services including the Information Technology Services, Pharmaceuticals, Biotechnology, Medical & Tourism sectors. Right now, it is particularly ripe for market reforms in view of solid platform created by Make in India and Invest India initiatives of Prime Minister Narendra Modi.

China’s Reliability Crisis

The Covid-19 has brought about a clear reliability crisis for the Chinese government. Investors will certainly reconsider if it is wise to invest in a country known for its shoddy transparency.

Further, flourishing probabilities

India has massive potential to grow. Just 35 years ago, the Indian and Chinese economy had similar exports. The Chinese economy experienced massive growth, in part, due to substantial market friendly reforms. If a communist country which doesn’t speak English or share little values with western world can serve the world economy, so can India.

We stand to gain through our Make in India and allied initiatives. Commendable job has been done to offer ease of doing business to investors, reducing rent seeking and ensuring transparency. However, lots needs to be done to cover large ground very quickly.

Land and labor reforms are certainly key aspects to it. India needs to have more market friendly land and labor laws with adequate safeguards to protect individual freedoms. Its administration services are understaffed at the upper levels relative to its population leading to excessive stress, possible reductions in speed of bureaucratic service and concentration of power.

What Next once the Pandemic ends!?

Once the pandemic is brought under control, India must actively engage in rebuilding the world economy. The world must think beyond naked profit and look to shift manufacturing and sourcing the services to a democratic and competitive nation which guarantees basic freedoms, is committed to reforms and can continuously adapt and innovate to changing global market needs. That is the essential economic take away from the catastrophic disruption of supply chains due to Covid-19 pandemic.