SUPPLY CHAIN RESILIENCE INITIATIVE (SCRI)
Trade ministers of India, Japan and Australia have formally launched the Supply Chain Resilience Initiative (SCRI). In order to counter China’s dominance of supply chain in the Indo-Pacific region,
What is it?
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.
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.
- 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.
Possible policy measures under the initiative may include:
- Supporting the enhanced utilization of digital technology.
- Supporting trade and investment diversification.
- The SCRI aims to reduce dependence on China amid a likelihood of rechurning of supply chains in the Indo-Pacific region amid the Covid-19 pandemic.
- It seeks to build upon the existing bilateral frameworks like the ASEAN-Japan Economic Resilience Action Plan and India-Japan Industrial Competitiveness Partnership and attract foreign direct investment in the region.
- In unanticipated events-whether natural, such as volcanic eruptions, tsunamis or earthquake 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. Thus, SCRI helps in diversifying risk.
Significance to India:
- Following the border tensions with China,partners such as Japan have sensed that India may be ready for dialogue on alternative supply chains.
- China still remains a large source of critical imports for India,from mobile phone components to pharmaceutical ingredients. An internal push to suddenly cut links with China would be impractical.
- Over time,if India enhances self-reliance or works with exporting nations other than China, it could build resilience into the economy’s supply networks.
- It will help boost India’s manufacturing competitiveness and increase its share in world trade. In this pursuit, there isa need to create an infrastructure that raises the competitiveness of India’s exports.
While India appears an attractive option for potential investors both as a market and as a manufacturing base, it needs to accelerate progress in ease of doing business and in skill building.