“Supply Chain Resilience Initiative or SCRI” launched by India, Japan and Australia

What is the News? India, Japan, and Australia have launched the SCRI or Supply Chain Resilience Initiative in a virtual Trilateral Ministerial Meeting.

What do you mean by Supply Chain Resilience?

• It is the capability of the supply chain of a country to handle any kind of disruption and function normally in difficult times. One approach is diversifying the source of supply across a group of supplying nations instead of being dependent on just one or a few.
• Need: Disruption of supplies from a particular country can happen due to natural calamities such as pandemics or man-made events such as armed conflicts. It can adversely impact the destination country’s economic activities.
• Example: Japan imported $169 billion worth from China in 2019 accounting for 24% of its total imports. However, Japan’s imports from China fell by half in February 2020 that impacted Japan’s economic activity.

About Supply Chain Resilience Initiative:

1. 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.
2. Projects: The initial projects under the SCRI will be:
   • Sharing of best practices on supply chain resilience and
   • Organizing Investment promotion events and buyer-seller matching events. It will provide stakeholders an opportunity to explore the possibility of diversification of their supply chains.
3. Policy Areas: The possible policy measures may include:
   1. supporting the enhanced utilization of digital technology and
   2. supporting trade and investment diversification.
4. Meeting: The meeting by the trade ministers of three countries will be convened at least once a year. It will be helpful in the implementation of the SCRI as well as to consult on how to develop the Initiative.

What was the need for this initiative?

• Firstly, Covid-19 Impact: With the disruption by Covid-19, countries have realized the shortcomings of that dependence over a single nation. Thus, the initiative aims to reduce the dependency on a single nation (at present China).
• Secondly, 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.
• Thirdly, to counter China’s Influence in the Indo-Pacific Region.

Source: Hindu Businessline