Friendshoring strategy

Context

In a meeting of US and Indian tech business leaders, the United States have shown interest to strengthen US-India ties in the technology sector and said that India is an important part of a US business strategy of “friend shoring” where supply chains to the US are being made resilient.

About

What is a Friend shoring strategy?

Friend-shoring means encouraging companies to shift manufacturing away from authoritarian states and toward allies.
Objective: The idea of ‘friend-shoring’ supply chains is gaining purchase among economic policymakers concerned about relying on geopolitical competitors for accessing critical materials and technologies.
Benefits:
- Friend-shoring is about deepening relationships and diversifying our supply chains with a greater number of trusted trading partners to lower risks for our economy and theirs.
- It will also encourage domestic production, which could substitute for imports.

India-US trade relations:

The US is India’s biggest trading partner.
In 2021, our bilateral trade was over $150 billion.

Upcoming Agreements:

Partnership for Global Infrastructure and Investment, or PGII:
- Under PGII, the United States has announced investments in Agri-tech to enable climate-smart agricultural production and in digital payments systems for micro-entrepreneurs.
- The US aims to mobilize $200 billion through 2027 for PGII and will look at India as a partner to invest in for its future.

Impacts for ‘Freindshoring’:

This would reduce overdependence on countries which could pose a security risk and are a single source of critical inputs and raw materials.
However, limiting the trade of key inputs to trusted countries could reverse the gains of globalization.

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