Abstract/Description

How do plants’ sales and input-sourcing respond to aggregate shocks? Using novel administrative data, we show that COVID-19 induced lockdown in March 2020 led to domestic trade collapse across regions in India. Well after the movement restrictions were lifted, trade continues to suffer while GDP recovers as plants switch from inter-regional sales and input-sourcing to intra-region. Plants more dependent on inter-region sales (inputs) lead this regional realignment. Additionally, products with a higher pre-pandemic scope to expand into the home market witness greater realignment, accounting for 7.6 percent of the sales growth in the last quarter of 2020.