India can expect a 0.5 per cent hit on economic growth this fiscal if the COVID-19 pandemic lasts longer, says Care Ratings.

The economic impact will be significant and long term if the virus continues for longer. A widening of the fiscal deficit is also feared. NPA levels in the banking sector are expected to increase. Exports and imports are likely to contract. While hospitality, tourism, aviation, auto and auto ancillary will be hit hard, pharma and healthcare will benefit from the pandemic.

If China continues to battle with the coronavirus, Indian garment manufacturers will need to look at other alternatives, including local sourcing, which in turn may increase the cost of finished goods by three per cent to five per cent. In addition to this, identifying vendors in such a short time can take a toll on lead times, quality and cost. On an average, India exports 25 million kg of cotton yarn a month to China. The garment sector in Tirupur is heavily dependent on China for sourcing accessories. The total shutdown in China has disrupted the supply chain. The sector may hurt its margins if accessories are sourced from a trader in India or from an overseas market other than China.