Resilient Supply Chains

ECONOMY/ GOVERNANCE

Topic: General Studies 2,3:

• Indian Economy and issues relating to planning, mobilization, of resources, growth, development.
• Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Resilient Supply Chains

Context: Pandemic Lesson – importance of creating resilient supply chains that can withstand disruptions and ensure reliability for the global economy.

India – Issues

• When the pandemic broke out, it had an immediate effect on supply chains emanating from China. 
• In India, several companies felt the disruption in the automotive, electronics and white goods sectors. 
• India excels in the pharmaceuticals sector but the over-reliance on Active Pharmaceutical Ingredients (APIs) from China still creates vulnerabilities in the value chain.
• Despite being the fourth largest market in Asia for medical devices, India has an import dependency of 80%. Among the biggest exporters to India in this field are China, the U.S., Germany, Singapore and Japan.
• India imports 27% of its requirement of automotive parts from China.

Supply Chain Resilience Initiative (SCRI)

• It is in this context that India, Japan and Australia initiated the Supply Chain Resilience Initiative (SCRI) focusing on automobiles and parts, petroleum, steel, textiles, financial services and IT sectors. 
• The SCRI may be bolstered by the future involvement of France, though this might depend on the European Union’s position. 
• The United Kingdom has also shown interest in the SCRI.

Atmanirbhar Bharat

• It is aimed at strengthening India’s capacities to participate more vigorously without being prey to supply chain disruptions.
• GoI is providing a big boost to defence manufacturing under the ‘Make in India’ programme. It has identified a negative import list of 101 items.
• India is seeking to enhance its presence substantially in the global supply chains by attracting investments in the semiconductor components and packaging industry. 
• The government is actively promoting domestic manufacture of printed circuit boards (PCBs), components and semiconductors, as the Indian electronics sector gradually shifts away from completely knocked down (CKD) assembly to high value addition.
• India has the capacity and the potential to become one of the world’s largest destinations for investments, and one of the world’s largest manufacturing hubs, in the aftermath of the pandemic.