Import-dependent sectors such as auto components (where SMEs have a share of 25-30 per cent) and pharma bulk drugs (where the SME share is 35-40 per cent) can withstand headwinds in the near term, given their inventory of one to two months. However, as inventories run down, the pressure will increase.
In export-dependent sectors such as apparel (SME share 25-30 per cent), leather (SME share 80-85 per cent) and ceramic tiles (SME share 50-55 per cent), exporters are hopeful of an increase in orders, including from new geographies, because of manufacturing disruptions in China. However, the benefits are likely to be limited, because of expected moderation in global GDP growth.
Meanwhile, commodity prices such as steel will come under pressure as demand declines. This will impact refractories, steel re-rollers, and the pig iron industry, which have a sizeable MSME
And if the outbreak within India is not contained, discretionary spending will be impacted.