India – US Economic and Financial Partnership Meeting
- Recently the 9th Ministerial Meeting of Indo-US Economic and Financial Partnership has been organized.
- In this, the Indian delegation is led by the Union Minister of Finance and Corporate Affairs and the American delegation is led by the Revenue Secretary.
- In this meeting, America has expressed its desire to deepen relations with India under the ‘Friend-Shoring’ scheme.
- Citing increasing economic integration, the US Treasury Secretary has supported friend-shoring for India.
- Friend-shoring is a concept introduced by America. It is cited as a means of protecting global supply chains from external disruptions or economic downturns.
- Over the years, the world has faced several types of trade barriers.
- These include the US-China trade war, the Covid-19 pandemic, Russia’s invasion of Ukraine, etc.
- The basic idea behind this concept is to create a group of countries with shared values. After this, policies have to be made to encourage companies to manufacture in the countries of this group.
- Under this, the emphasis is on the semiconductor industry, green energy, telecommunication and mineral industry sectors.
Importance of friend-shoring
- Disruption of the global economy will be prevented by countries such as China and Russia taking undue advantage of their market dominance in terms of critical raw materials, technologies or products.
- It will help in diversifying global supply chains.
- This will enable businesses to cope with external crises such as war, famine, political change or future pandemics.
Concerns about friend-shoring
- It is considered a part of the deglobalisation process. As a result, the future may see more supply constraints and higher prices in the short term and lower growth rates in the long term.
- Poor countries in need of global trade may be left out of this group.
India-US Economic Relations:
- The overall US-India bilateral trade in goods and services to reach a record level of US$ 157 billion in 2021.
- The United States is India’s largest trading partner and most important export market.
- The US is one of the few countries with which India has a trade surplus. India had a trade surplus of US$ 32.8 billion with the US in the year 2021-22.
Other related terms
- Offshoring: Under this, companies cut costs by shifting manufacturing to countries with cheap labor. The two countries also discussed mutual cooperation in information sharing to combat offshoring tax evasion.
- Reshoring: Under this, companies carry out the production process back to their home country.
Source – The Hindu