Supply Chain Resilience Initiative – UPSC Prelims

Supply Chain Resilience:
  • Supply Chain Resilience 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.
Supply Chain Resilience Initiative:
  • India, Japan, and Australia have launched the 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.
What was the need for this initiative?
  • 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).
  • 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.
  • To counter China’s Influence in the Indo-Pacific Region.
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