Friendshoring strategy

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.

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.

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.