Supply Chain Resilience Initiative (SCRI): Objectives, Key Highlights & FAQs

Few things that people consume every day are produced in the vicinity. This is the wonder of the global supply chain, but it is also proving to be an Achilles’ heel for market economies. The recent global pandemic, political unrest, and regional armed conflicts showed that supply chain resilience is the key to saving economies from unpredictable road bumps. To achieve that target, the foreign ministers of Australia, India, and Japan launched a trilateral Supply Chain Resilience Initiative, or SCRI. 

What is the supply chain resilience initiative (SCRI)?

The Supply Chain Resilience Initiative (SCRI) is a formal agreement reached at a trilateral ministerial meeting, conducted virtually on 27th April 2021 between foreign ministers of India, Japan, and Australia. 

In that meeting, foreign ministers unanimously agreed that the COVID-19 pandemic and resultant worldwide restrictions on cross-border movements disrupted the global supply chain. They also acknowledged other factors that might disrupt sourcing from a specific country and jeopardise the stability of the world economy. 

So, it was decided to de-risk respective economies in the Indo-Pacific region by diversifying the sourcing of goods and services from any one country to multiple trading partner countries. 

The policy measures suggested in the trilateral virtual meeting are: 

• Increased utilisation of emerging digital technologies to facilitate the supply chain's diversification process. 
• Policy-level measures to promote and support trade and investment diversification actively from one or a few countries. 

Later along with initial signatories, 11 other countries signed an agreement to strengthen and de-risk the global supply chain in the Indo-Pacific region as part of the Supply Chain Resilience Agreement (Pillar 2) of the Indo-Pacific Economic Framework (IPEF) detailed in further section.

What is the supply chain resilience concept?

The concept of the Supply Chain Resilience Initiative (SCRI) is to move away from depending on any specific country for sourcing and towards diversifying sourcing from multiple countries and regions. This can potentially de-risk an economy from sudden manmade and natural supply chain disruptions. 

Example: Country A sources iron ingots and coal from Country B. Because of an unforeseeable incident, Country B cannot deliver goods disrupting production in factories in Country A indefinitely. If Country A had multiple sourcing partners, they could have swiftly arranged alternative supply routes from other sourcing partners and minimised the risk of production disruption.

Objectives of supply chain resilience concept

If implemented effectively, the Supply Chain Resilience Initiative can serve multiple objectives.

1. SCRI will build mutually complementary relationships among partner countries in the Indo-Pacific region. 
2. It will increase the fresh flow of FDI or Foreign Direct Investments in the partner countries and promote regional growth. 
3. The initiative will work out a new route map for cooperation based on the existing supply chain partnerships in the region, like the Indo-Japan partnership. 

Supply chain resilience initiative member countries

Considering the Supply Chain Resilience Agreement (Pillar 2) of the Indo-Pacific Economic Framework (IPEF), the member countries are:

• India
• Japan
• Australia 
• Brunei
• Fiji
• Indonesia
• Republic of Korea
• Malaysia
• New Zealand
• Philippines
• Singapore
• Thailand
• USA
• Vietnam 

Key highlights of supply chain resilience initiative (SCRI)

The key highlights of the Supply Chain Resilience Initiative are: 

• The initiative is based on the consultation between high-level dignitaries (foreign ministers) of India, Japan and Australia. 
• It will de-risk economies in the region from manmade and natural disruptions in the supply chain through diversification of sourcing partners. 
• The Supply Chain Resilience Agreement (Pillar 2) was signed by 11 other countries in the Indo-Pacific region. 
• It will promote mutually beneficial relations between signatory countries.

Advantages for India through SCRI

India is expected to gain from this initiative in multiple ways: 

• It will establish India as a reliable sourcing partner in the changing global supply chain scenario. This will further promote the Atmanirbhar Bharat initiative. 
• It will attract more foreign direct investment toward the Indian economy. 
• India will gain stronger partners in the Indo-Pacific region to counter the Chinese dominance.