Supply Chain Resilience Initiative (SCRI) by India, Japan and Australia
To counter China’s dominance in the supply chain in the Indo-Pacific region, the ‘Supply Chain Resilience Initiative’ (SCRI) was formally launched at a virtual tripartite ministerial meeting by trade ministers of India, Japan and Australia.
Meaning of Supply Chain Resilience:
- Supply Chain Resilience is an approach in the context of international trade, which helps a country to ensure that, Instead of relying on one country for its entire supply, it should extend the risk of its supply to different supplier countries.
- The main reason for adopting supply chain resiliency is that any type of force majeure can disrupt supply coming from a specific country, adversely affecting the economic activities of the destination country. Unexpected events include both natural (e.g., volcanic eruptions, tsunamis, earthquakes or epidemics) or man-made (e.g., armed conflict in a specific area).
- Therefore, it is very important for any country not to restrict its supply chain to only one country, but to expand it to different countries.
Implications of Supply Chain Resilience for Japan:
- According to a data, during the year 2019, while Japan exported $ 135 billion worth of goods to China, Japan also imported a total of $ 169 billion from China. Thus, China accounted for about 24 percent of Japan’s total imports.
- It is therefore clear that any obstacle in the supply chain that China undertakes can adversely affect Japan’s economic activities and its economy.
- Additionally, tensions between the United States and China over the past few months have also raised concerns among countries such as India, Japan and Australia, as such tensions are likely to affect the global supply chain.
Implications of Supply Chain Resilience for India:
- China accounts for about 14 percent of India’s total imports, if in a critical situation, China stops importing India for any reason; it can drastically affect the Indian economy.
- However, it is completely impractical for India to abruptly end its supply chain with China or reduce or stop its imports.
- Indian pharmaceutical companies are highly dependent on China for the import of essential ingredients for the manufacture of many medicines. In addition, China accounts for 45 percent of India’s total electronics imports.
- It is therefore clear that India cannot end or close its own supply chain with China, but if India gradually moves towards self-sufficiency over time or strengthens its supply chain with countries other than China. It will create flexibility in the supply chain of the Indian economy, which will prove to be very beneficial for the Indian economy in the future.
Implications of Supply Chain Resilience for Australia:
- Although China and Australia are among the major trading partner countries, trade relations between the two have been quite tense during the Covid-19 crisis.
- China banned the import of animal meat from some Australian companies in the year 2020. Apart from this, import duty was also imposed on barley imported from Australia.
- In the year 2020, China’s Ministry of Education warned Chinese students studying in Australia or wishing to study there to be increasing racism.
- Recently, an important project of China’s ambitious project Belt and Road Initiative (BRI) was suspended by the Australian Parliament.
- Australia is trying to bring flexibility in its supply chain, possibly due to the increasing tension between China and Australia.
Source – The Hindu
