Supply Chain Resilience Initiative

In 2021, India, Japan and Australia formally launched the Supply Chain Resilience Initiative (SCRI) to build resilient supply chains in the Indo-Pacific region as they seek to reduce dependence on China.

Supply Chain Resilience Initiative:

India, Japan, and Australia have launched the Supply Chain Resilience Initiative.
Aim: The initiative aims to create a virtuous cycle of enhancing supply chain resilience to attain strong, sustainable, balanced, and inclusive growth in the region.

What are the Objectives of Supply Chain Resilience Initiative?

To attract foreign direct investment in order to transform the Indo-Pacific region into an “economic powerhouse.”
To establish a mutually beneficial relationship among partner countries.
To devise a strategy for expanding the existing supply chain network.
Japan and India, for example, have an India-Japan competitiveness partnership that deals with Japanese companies located in India.

What are the Features of Supply Chain Resilience Initiative?

First proposed by Japan.
Aims to reduce reliance on China amid the possibility of supply chain reorganization in the Indo-Pacific region as a result of the Covid-19 pandemic.
Sharing best practices on supply chain resilience and holding investment promotion events .
Joint measures could include encouraging greater use of digital technology as well as trade and investment diversification.
This is significant in light of Japan’s eagerness to include ASEAN in the initiative, which India has opposed.
India wants to protect its interests from China’s indirect influence through the bloc (ASEAN) as it increases its self-reliance by reducing its reliance on imports.

What was the need for this initiative?

Impact of US-China Trade Tensions: The tariff sanctions imposed on each other during the US-China trade threatened all significant economies heavily reliant on international trade.
Covid-19 Impact: The initiative aims to reduce the dependency on a single nation (at present China).
To counter China’s Influence in the Indo-Pacific Region.

What is the Significance of SCRI to India?

Border tensions with China, partners such as Japan have sensed that India is ready to engage in discussions about alternative supply chains.
China continues to be a significant source of critical imports for India, ranging from mobile phone components to pharmaceutical ingredients.
An internal push to cut relations with China abruptly would be impractical.
Over time, if India increases its self-reliance or collaborates with exporting nations other than China, it may be able to strengthen the economy’s supply networks.

Way Forward

The SCRI must consider full/partial participation of key economies and economic blocs—including ASEAN, the European Union (especially France, given its Indo-Pacific focus), and the United Kingdom
On the whole, Despite its merits, the SCRI is structurally limited right now
To meet expectations, the Australia-Japan-India trilateral must acknowledge the challenges and shape the initiative adequately to overcome them.