Supply Chain Resilience Initiative (SCRI)

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Background

With COVID-19 and trade tensions between China and the US threatening supply chains or actually causing bottlenecks, Japan has mooted the Supply Chain Resilience Initiative (SCRI) as a trilateral approach to trade, with India and Australia as the other two partners.

Supply Chain Resilience Initiative

In the context of international trade, supply chain resilience is an approach that helps a country to ensure that it has diversified its supply risk across a clutch of supplying nations.
Objective
- To attract foreign direct investment to turn the Indo-Pacific into an “economic powerhouse”
- To build a mutually complementary relationship among partner countries.
- To work out a plan to build on the existential supply chain network.

Why this Initiative?

With the spread of Covid-19, countries have realized that dependence over a single nation is not good for both global economy and national economies.
USA-China Trade Tensions, where both applied tariff sanctions on each other.
India as an Emerging Supply Hub: The businesses have started seeing India as a “hub for supply chains”.
Initiative would be a counter to China’s expansionist approach.
India is carrying forward the sentiments of self-reliance focusing on less dependence on China which is one of the reasons behind SCRI.
Thus, the initiative aims to reduce the dependency on a single nation (at present China). SCRI is a direct response to individual companies and economies concerned about Chinese political behavior and the disruption that could lead to the supply chain.

Japan viewing India as partner for the SCRI

Japan is the fourth-largest investor in India with cumulative FDIs touching $33.5 billion in the 2000-2020 periods.
It accounts for 7.2% of inflows in that period, according to quasi-government agency India Invest.
Imports from Japan into India more than doubled over 12 years to $12.8 billion in FY19. Exports from India to the world’s third-largest economy stood at $4.9 billion that year, data from the agency showed.
It is a clear reflection that the two countries are unlikely to allow individual cases to cloud an otherwise long-standing and deepening trade relationship.

India’s stand

Following the border tensions, partners such as Japan have sensed that India may be ready for dialogue on alternative supply chains.
Earlier, India would have done little to overtly antagonize China. But an internal push to suddenly cut links with China would be impractical.
China’s share of imports into India in 2018 stood at 14.5%. It supplies dominant segments of the Indian economy.
Sectors that have been impacted by supply chain issues arising out of the pandemic include pharmaceuticals, automotive parts, electronics, shipping, chemicals and textiles.
Over time, if India enhances self-reliance or works with exporting nations other than China, it could build resilience into the economy’s supply networks.