The Trade Ministers of India, Japan and Australia have formally launched the Supply Chain Resilience Initiative (SCRI).
The SCRI aims to create a virtuous cycle of enhancing supply chain resilience with a view to eventually attaining strong, sustainable, balanced and inclusive growth in the Indo-Pacific region. The trio (India, Japan and Australia) along with the US makes Quad grouping.
Supply Chain Resilience Initiative
- Supply Chain Resilience (Concept):
- Meaning: In the context of international trade, supply chain resilience is an approach that helps a country to ensure that it has diversified its supply risk across a clutch of supplying nations instead of being dependent on just one or a few.
- Importance: In unanticipated events -whether natural, such as volcanic eruptions, tsunamis, earthquakes or even a pandemic; or manmade, such as an armed conflict in a region — that disrupt supplies from a particular country or even intentional halts to trade, could adversely impact economic activity in the destination country.
- Supply Chain Resilience Initiative:
- The Covid-19 pandemic was having an unprecedented impact in terms of lives lost, livelihoods and economies affected, and that the pandemic had revealed supply chain vulnerabilities globally and in the region.
- To attract foreign direct investment to turn the Indo-Pacific into an “economic powerhouse”.
- To build a mutually complementary relationship among partner countries.
- To work out a plan to build on the existential supply chain network. Japan and India, for example, have an India-Japan competitiveness partnership dealing with locating the Japanese companies in India.
- The SCRI, first proposed by Japan, aims to reduce dependence on China amid a likelihood of rechurning of supply chains in the Indo-Pacific region amid the Covid-19 pandemic.
- Initially, SCRI will focus on sharing best practices on supply chain resilience and holding investment promotion events and buyer-seller matching events to provide opportunities for stakeholders to explore the possibility of diversification of their supply chains.
- Joint measures may include supporting the enhanced utilisation of digital technology and trade and investment diversification.
- Expansion of the SCRI may be considered based on consensus, if needed, in due course. The ministers have decided to convene at least once a year to provide guidance to the implementation and development of the SCRI.
- This assumes significance in the wake of Japan’s keenness to onboard the ASEAN in the initiative, something that India has opposed.
- India wants to safeguard its interests from China’s indirect influence through the bloc (ASEAN) as it builds on its self-reliance through reduced dependence on imports.