In view of the continuous increase in corona infection in China, lockdown has been imposed in many cities. It also includes China’s tech hub Shenzhen. Experts say that if the lockdown in China is prolonged, then the prices of televisions, laptops and smartphones in India may increase.
Navkar Singh, Research Director, International Data Corporation (IDC), says that India is dependent on China for about 20 to 50 percent of the supply of electronic components. The city of Schengen has a major stake in this. All brands are sure to see a price hike if once again the supply is affected or if there is no possible relief.
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The biggest thing is that the companies are not in a position to bear the rising prices of raw materials. In such a situation, they will pass the burden on the customers only. Singh says that if there is a lockdown of three weeks or more in the city of Schengen, then its effect on smartphone shipments could last till the middle of June quarter or till the September quarter.
What do experts say
Tarun Pathak, director of Counterpoint Research, says equipment prices and rental rates have remained high for a long time. Companies are no longer in a position to bear the burden of increasing raw material prices. If the lockdown in China is prolonged, then the price of the smartphone may increase by five to seven percent.
If the situation does not improve soon, a big increase is possible.
According to Sanchit Vir Goga, Chief Analyst, Greyhound Research, the price hike will depend on how long the lockdown gets extended. According to him, the prices of various goods may increase by 20 to 30 percent. However, if the supply issue eases out in the coming quarters, the hike in prices may remain in the range of 10 to 15 per cent. Other analysts say most smartphone companies are already facing chip shortages
Stocks with companies for one and a half months
Arjun Bajaj, director of television maker Videotex International, says that India is largely dependent on China for raw materials. Raw material prices have already increased. Some companies will have stock for one to one and a half months. Industries will be affected if the lockdown gets prolonged. Production of the final product may be delayed due to supply disruptions. Bajaj has expressed the possibility that TV prices may increase by 7 to 10 percent if the lockdown in Shenzhen extends longer.
Auto companies can reduce production
In the past few weeks, supplies of equipment and raw materials from China and Hong Kong have come down. In view of this, consumer electronics and automobile manufacturers may cut production from April. Industry sources say that due to the continuous increase in the cases of COVID-19 in China, the supply is being affected due to the lockdown.
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According to sources, consumer electronics companies import finished raw materials from China, but due to non-availability of supplies, the inventories of the companies are decreasing. In such a situation, companies will be forced to cut production from April. India’s electronics companies depend on China for 40 to 50 percent of their raw materials. A senior company official says that companies are already facing 10 to 15 days delay in supply of raw material and equipment. This will affect production next month. Apart from this, automobile companies are also monitoring the situation and may consider cutting production if the supply is affected.