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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:
- 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.
- 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.
- Policy Areas: The possible policy measures may include:
- supporting the enhanced utilization of digital technology and
- supporting trade and investment diversification.
- 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
