Friendshoring

Subject: Economy

Context:

The US is ‘friendshoring’, and a key beneficiary could be India.

Concept:

Friendshoring:

In the post-pandemic world and geopolitical challenges-the concept emerged as an alternative model for international trade.
Friendshoring or Allyshoring is a concept derived from onshoring and nearshoring but it goes beyond that by limiting supply chain networks to allies and friendly countries.
- “Reshoring”, “allied shoring”, “onshoring” and “nearshoring” which is a practice of relocating supply chains to countries where the risk of disruption from political chaos is low.
In June 2021, Elaine Dezenski and John C. Austin used the term “allyshoring”. Also, they gave credit to Bonnie Glick (ex-Deputy Administrator of the United States Agency for International Development)for introducing it for the first time.
Friendshoring aims to encourage trade and deepen economic relations among trusted trading partners; strengthen supply chains; and diversify away from nations which could pose geopolitical and security risks to the global supply chain.

Implication:

It would reduce overdependence on countries that are a single source of critical inputs and raw materials.
Relocating to nations with favorable politics could make products more expensive.
It may push the world towards a more isolated place for trade and reverse the gains of globalization– being a part of the “deglobalisation” process.

India-US trade relations:

In 2021-22, the US re-established itself as India’s largest trading partner.
Bilateral trade between the two was worth $119.41 billion.
India’s trade surplus with the US stood at $32.8 billion in 2021-22.
In terms of exports, the US is India’s largest trading partner, while in terms of imports, the US ranks third.
Also, the US is the top source of foreign portfolio investment in India.