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.
- 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.
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