The Supply Chain Resilience Initiative (SCRI) was formally launched by the Trade Ministers of India, Japan and Australia – who are three members of the Quad grouping except the U.S.
GS-II: International Relations (Foreign Policies and Agreements affecting India’s Interests), GS-III: Indian Economy
Dimensions of the Article:
- What is Supply Chain Resilience?
- India, Japan and Australia’s Supply Chain Resilience Initiative (SCRI)
- India, Japan and Australia on supply chain disruptions and measures
What is Supply Chain Resilience?
- 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.
- 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.
India, Japan and Australia’s Supply Chain Resilience Initiative (SCRI)
- India, Japan and Australia launched the Supply Chain Resilience Initiative (SCRI) with the aim 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 SCRI was first proposed by Japan with the aim of reducing dependence on China amid a likelihood of rechurning of supply chains in the Indo-Pacific region amid the Covid-19 pandemic.
- SCRI will initially 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.
Objectives of the SCRI
- 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.
India, Japan and Australia on supply chain disruptions and measures
- The three sides agreed the pandemic “revealed supply chain vulnerabilities globally and in the region” and “noted the importance of risk management and continuity plans in order to avoid supply chain disruptions”.
- Some of the joint measures they are considering include supporting the enhanced utilisation of digital technology and trade and investment diversification, which is seen as being aimed at reducing their reliance on China.
- 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 region.
China’s Foreign Ministry described the move as ‘unrealistic’ – saying that the formation and development of global industrial and supply chains are determined by market forces and companies’ choices. According to China artificial industrial ‘transfer’ is an unrealistic approach that goes against the economic laws.
-Source: The Hindu