Worsening epidemic in India hampers recovery, chills foreign investment

New Delhi, April 23 (KMS):  A recent surge of COVID-19 cases in India, which media reports said could possibly get out of control, will be another major hit to the nation’s economy and could also discourage foreign investment, experts said.

India marked a new milestone in the raging epidemic on Thursday, reporting 314,835 new daily cases, the highest one-day tally, according to a Reuters report on Thursday.

Hospitals across northern and western India including the capital, New Delhi, have issued notices saying they have only a few hours of medical oxygen required to keep COVID-19 patients alive, said the report.

Although there are objective reasons for the resurgence such as high population density, the fluid situation is largely due to mal-management, Dai Yonghong, director of the Institute of Bay of Bengal Studies with Shenzhen University, told the Global Times on Thursday.

At the very early stage, leaders of the country tried to politicize the coronavirus, provoked border disputes with China, failing to deal with the disease seriously, Dai said.

In the short term, the worsening situation will affect India’s trade, including with China, since domestic demand has withered and manufacturing ability has been handicapped due to a wave of resurging virus, Dai said. “China’s exports to the country may also be affected.”

China leapfrogged the US in 2020 to become India’s biggest trade partner despite India’s numerous provocations against China over the past year, from the border spat to discrimination of Chinese investments and goods.

According to a BBC report, India imported goods worth $58.71 billion from China last year, more than India’s combined imports from the US and United Arab Emirates – its second and third-largest trade partners.

Moreover, observers cautioned that the virus is causing a larger retreat of Chinese investment from India, which may not go back anytime soon.

Chinese investment in India is rapidly contracting. Many companies are considering a reduction in the scale of their operations, Sha Jun, executive partner at the India Investment Services Center of the Yingke Law Firm, told the Global Times.

According to a Forbes report on Wednesday, “despite India’s geopolitical connections with the US government, multinationals have largely chosen to relocate elsewhere,” citing “India’s hostility to foreign investment such as it is making it difficult for companies to conduct simple transactions in the country.

Sha said the unfavorable business environment and the coronavirus have accelerated the pace of Chinese investors’ retreat. “Except for the Chinese who have been rooted for a long time, most have evacuated from India. For a while, nobody will have much interest in that market.”

Sha said multinational companies are now looking at other destinations such as Vietnam, Thailand, Indonesia, Mexico, Russia and Africa.

Dai noted that India may need more time to restore normalcy in the post-epidemic period.

The resurgence in India has a limited impact on the Chinese economy and the global economy as a whole, Liu Xiaoxue, an associate research fellow at the National Institute of International Strategy under the Chinese Academy of Social Sciences, told the Global Times.

“As an economy that relies on domestic demand, India’s foreign trade is about $800 billion a year, while – unlike China – India’s standing in global industry and supply chains is not that important,” Liu said. She said that China-India trade barely ranks among the top 10 in terms of Chinese trade partners. – Courtesy Global Times

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